A federal judge in Philadelphia has rejected a request by the Department of Justice (DOJ) to bring an early conclusion to a $3 million settlement made with a Pennsylvania bank that was accused of redlining.
The Philadelphia Inquirer reports US District Judge Michael M. Baylson did not accept the DOJ’s argument that ESSA Bank & Trust substantially complied with the 2023 settlement, with was designed to run five years. Baylson ruled the bank only achieved a “partial satisfaction” of the settlement, adding that a premature conclusion of the settlement “does not achieve its purpose — to remedy ESSA’s previous discriminatory lending practices and promote equal access to mortgage credit to prevent future discrimination.”
At the time of the settlement, the DOJ claimed that ESSA failed to provide mortgage lending services and did not serve the credit needs of majority-Black and Hispanic neighborhoods in the Philadelphia metropolitan area between 2017 and 2021. As part of the settlement, ESSA agreed to invest at least $2.92 million in a loan subsidy fund to increase access to credit for home mortgage, improvement and refinance loans, as well as home equity loans and lines of credit, in majority-Black and Hispanic neighborhoods in the bank’s lending area. ESSA also agreed to allocate $125,000 for community partnerships and $250,000 on advertising, outreach, consumer financial education and credit counseling aimed at consumers in majority-Black and Hispanic communities.
Baylson said the settlement “directly advances the goals of federal antidiscrimination law, delivers tangible benefits to the people of Philadelphia, and promotes the public interest in the finality and integrity of judicial remedies.”
Last week, ESSA’s parent company ESSA Bancorp completed a merger with CNB Financial Corporation (NASDAQ: CCNE). The DOJ did not cite the merger as part of its request to conclude the settlement.
