According to a complaint filed today with the Department of Housing and Urban Development, OneWest Bank has consistently violated the Fair Housing Act by refusing to locate bank branches in minority communities or issue mortgage loans to people of color. The bank was also more likely to foreclose on properties in communities of color, and their holdings of foreclosed properties in minority communities were not well-maintained, the complaint alleges.
This matters because until 2015, OneWest Bank’s CEO was Steven Mnuchin, Donald Trump’s national campaign finance chair and rumored choice for Treasury Secretary.
Two non-profit groups, the California Reinvestment Coalition and Fair Housing Advocates of Northern California, filed the complaint. The alleged conduct comprises “redlining,” the long-held practice of preventing minority families from acquiring home mortgages. Congress banned redlining in the Fair Housing Act of 1968, designed to prevent discrimination based on race, color, national origin, religion, sex, disability, or familial status.
Mnuchin and a consortium purchased OneWest from the Federal Deposit Insurance Corporation (FDIC) in 2009, when it was a failed institution known as IndyMac. He served as CEO through 2015, when the bank merged with CIT in a $3.4 billion deal. OneWest branches, mostly in California, still carry the same brand name. Mnuchin is no longer CEO of the merged company but joined the CIT board after the purchase completed in August 2015 (Mnuchin also received a $10.9 million severance package for serving as vice chair of CIT for less than a year). Mnuchin also started a hedge fund, Dune Capital.
The complaint alleges that most OneWest branches serve white customers. Of 74 branches across six southern California counties, zero are in African-American communities, one is in an Asian-American community, and eleven are in Hispanic communities. OneWest consolidated twelve branches over the past several years, and five of them were in census tracts with majority-minority residents.
Using data from the Home Mortgage Disclosure Act, the complainants find that OneWest’s mortgage lending largely avoided minority areas. This map shows mortgage applications for OneWest in 2014, when Mnuchin was still CEO. The applications, represented with green dots, fall almost entirely outside minority community census tracts.