Hudson City Bancorp has reached a settlement agreement with the U.S. Department of Justice and the Consumer Financial Protection Bureau over alleged violations of the Fair Housing Act and the Equal Credit Opportunity Act.
New Jersey-based Hudson City said it had to decided to settle the case, which includes paying a $5.5 million civil penalty, “so that it can focus on continuing to provide fair credit services to its customers and working to complete its pending merger with M&T Bank Corp.”
The Department of Justice and the CFPB investigated Hudson City’s lending practices in majority black and Hispanic areas in its footprint mostly outside of New Jersey from 2009 through 2013. The agencies alleged that the bank failed to originate enough loans in those areas compared to a group of other lenders in that market. Hudson City said it disagreed with the agencies’ statistical analysis, as well as the agencies’ conclusions.
“Although we do not agree with the DOJ’s and CFPB’s claims against the bank, we agree, and always have believed, that there should be no discrimination based on race, national origin, gender or age in obtaining a loan,” Denis J. Salamone, Hudson City’s chairman and CEO, said in a statement.
Hudson City said it agreed to offer $25 million in subsidies to support home lending in minority areas and to implement a number of outreach and educational programs to residents in those communities.
M&T and Hudson City have set Oct. 31 as a deadline to complete their merger deal, after which either party could walk away without a penalty. The banks have said the Federal Reserve plans to act on their application by Wednesday.