A federal judge has rejected the Trump Administration’s request to release from court supervision a bank that had been accused of discriminatory lending.
U.S. District Judge Michael M. Baylson of the U.S. District Court for the Eastern District of Pennsylvania found that continued oversight was needed to make sure the terms of the settlement with ESSA Bank were followed.
“Continued enforcement of the Consent Order is essential to remedy ESSA’s alleged discrimination against Black and Hispanic communities in the Philadelphia area and to fulfill federal laws combating discrimination and ensuring fair, equal access to credit for all communities,” the judge found.
As previously reported, in 2023 the Justice Department (DOJ) announced that ESSA had agreed to pay more than $3 million to resolve allegations that it engaged in a pattern or practice of redlining, in violation of both the Fair Housing Act (“FHA”) and the Equal Credit Opportunity Act (“ECOA”), from 2017 through at least 2021. In bringing the redlining claim, DOJ asserted that during this period ESSA failed to provide mortgage lending services to and did not serve the credit needs of majority-Black and Hispanic neighborhoods in the Philadelphia Metropolitan Statistical Area (“MSA”), particularly those in Philadelphia County.
The settlement required ESSA 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 areas. Under the terms of the settlement, ESSA agreed to spend $125,000 on community partnerships and $250,000 on advertising, consumer financial education and credit counseling. The agreement also required the bank to hire two new mortgage loan officers to serve its branches in West Philadelphia. In addition, the bank was required to conduct a research study to help identify the financial services needs in communities of color.
The Trump Administration contended that because ESSA had fully disbursed the loan subsidy fund, demonstrated a commitment to remediation, and substantially complied with its other obligations. it did not require additional supervision for the remaining parts of the settlement. The bank fully disbursed the fund in two years and the administration asked that the consent order be ended with three years remaining.
The National Fair Housing Alliance, the Housing Equality Center of Pennsylvania and POWER Interfaith objected to the administration’s request.
Judge Baylson agreed with those groups.
“ESSA’s partial satisfaction of the Consent Order does not achieve its purpose—to remedy ESSA’s previous discriminatory lending practices and promote equal access to mortgage credit to prevent future discrimination,” he wrote. “Upholding these commitments serves not only legal compliance, but also the broader public interest in fairness and equity.”
He called the government’s contention that ESSA had achieved the purpose of the consent order because it had paid out the loan subsidy fund “unpersuasive.”
“Several terms of the Consent Order remain unmet and/or require continued compliance over several years … and are highly relevant to achieving the Consent Order’s purpose,” he wrote.
As previously reported , the Trump Administration has obtained early termination of certain redlining consent orders, and a motion by the Administration to terminate a Lakeland Bank redlining consent order is also being opposed by the Housing Equality Center of Pennsylvania and the National Fair Housing Alliance as well as well as the New Jersey Citizen Action Education Fund.
Any future motions filed by the Trump Administration for the early termination of redlining consent orders likely will face opposition from community groups.
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