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After agreeing to settle federal redlining charges for $9 million, Rhode Island-based Washington Trust said it will diversify its executive team and board of directors in an agreement with the Rhode Island state general treasurer’s office.
Washington Trust will be directly monitored by and regularly report to the state General Treasurer James A. Diossa’s office on a quarterly basis on a set of 10 bulleted action items aimed at making access to its mortgage lending and financial services more equitable across Rhode Island.
The $7.01 billion-asset bank’s mortgage company subsidiary has offices in Braintree, Burlington, Sharon and Wellesley in Massachusetts, and the bank has a wealth management office in Wellesley.
Among the actions laid out in an announcement from Diossa’s office were the establishment of a “diverse and inclusive” advisory board that will meet and report to Diossa quarterly; increase the paid ads Washington Trust runs in media outlets in underserved communities of color; work with, support and sponsor organization and events centered on communities of color; diversification of the board of directors and executive team; expansion of the bank’s financial literacy and homeownership programs; and reporting of a community credit needs assessment to the treasurer’s office.
“I am in communication with Washington Trust’s Chairman and CEO to discuss the Bank’s recent settlement with the Department of Justice and to establish proactive actions to better serve all Rhode Islanders,” Diossa said in a statement. “We have had meaningful and constructive conversations about the important role the state and local banks play in helping Rhode Islanders, especially communities of color, achieve financial success and home ownership.”
“At the same time, we emphasized the need for more effective engagement, recommended ways in which the bank could expand their lending and outreach programs into underserved communities, and encouraged a willingness to create new programs,” he added.
Prosecutors from the Justice Department and the Rhode Island U.S. attorney’s office claimed that between 2016 and 2021, Washington Trust failed to provide mortgage lending services for borrowers of color and had never opened a branch in majority-Black and Latino neighborhoods, despite the bank’s expansion across Rhode Island.
The bank was alleged to primarily lend in majority-white areas and even when servicing majority-Black and Hispanic areas, loan applicants were disproportionately white.
The complaint also stated that the bank failed to train or incentivize lending staff to conduct outreach to compensate for its lack of presence in these communities. Under a pending consent order, Washington Trust continues to deny prosecutors’ claims but nontheless agreed to settle them.
Washington Trust Chairman and CEO Edward O. Handy said in a statement the bank is cooperating with Diossa’s office, and will expand financial services and housing programs in underserved communities in the state. In addition to the $9 million settlement with federal prosecutors Washington Trust also agreed to open two branches in majority-Black and majority-Latino neighborhoods staffed with at least two dedicated mortgage loan officers.
“We look forward to our Olneyville branch opening in the next few months and are actively researching locations for another branch in other underserved communities,” Handy said.
“We will continue to partner with organizations like the [Rhode Island] Treasurer’s office that are making a difference, especially those committed to advancing financial literacy and economic empowerment, supporting access to safe and affordable housing, and providing basic needs and family services. We appreciate the input provided by the Treasurer and look forward to continued communication and collaboration,” he added.
Federal prosecutors are also requiring Washington Trust to hire a director of community lending who will oversee the development of lending to communities of color.
