Why Some Bankers Are Rushing to Settle U.S. Redlining Probes
Resolving allegations that they’ve avoided Black and Hispanic homebuyers can help lenders smooth the way for big mergers
Redlining is no longer the story of racist maps drawn by federal authorities — now it's about how bankers build businesses, and regulators say they're cracking down.
Photographer: H. Armstrong Roberts/ClassicStock via Getty Images
A group of veteran bankers and private equity investors in Texas spotted an opportunity as the economy reeled a decade ago. They raised $1 billion, bought up hobbled lenders and called their new bank Cadence.
But by 2017 its 13 branches across Houston were only in majority White neighborhoods, according to a Justice Department lawsuit accusing the firm in August of redlining. The bank quickly settled for $8.5 million as executives put the last touches on their next deal: a $2.8 billion sale to BancorpSouth.