Judge denies Justice Department’s request to end its settlement agreement with a bank accused of redlining in Philly
The request was in line with other Justice Department moves across the country under the Trump administration to end similar fair-housing and antidiscrimination settlement agreements.
A federal judge in Philadelphia has denied the Justice Department’s request to prematurely end a settlement agreement it reached with a Pennsylvania bank it had accused of redlining in and around Philadelphia.
The government’s request was in line with other Justice Department moves across the country under the Trump administration to end similar fair-housing and antidiscrimination settlement agreements.
In 2023, the Justice Department accused ESSA Bank & Trust, based in Stroudsburg, of avoiding lending in majority-Black and Hispanic neighborhoods.
The bank denied the government’s accusations but entered into a settlement agreement in which the bank would give more than $2.9 million in loan subsidies to homebuyers in formerly redlined communities. The bank also agreed to take steps to work with homebuyers in neighborhoods it was accused of ignoring.
Last month, the Justice Department asked the U.S. District Court for the Eastern District of Pennsylvania to allow it to end its five-year agreement three years early.
» READ MORE: The Justice Department wants to end an agreement it reached with a Pa. bank it accused of redlining in Philly
In a decision filed Wednesday, U.S. District Judge Michael M. Baylson rejected the government’s argument that ESSA Bank had substantially complied with the agreement.
The bank’s “partial satisfaction” of the settlement agreement “does not achieve its purpose — to remedy ESSA’s previous discriminatory lending practices and promote equal access to mortgage credit to prevent future discrimination,” Baylson wrote.
He said enforcement of the legal agreement must continue for its remaining three years.
Baylson said the agreement “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.”
In response to the Justice Department’s motion last month to end the agreement early, the National Fair Housing Alliance and local civil rights organizations joined the case and argued that cutting short the legal agreement with ESSA Bank would eliminate “hard-won protections” and leave Philadelphians vulnerable to discrimination.
The Philadelphia-based Public Interest Law Center and the law firm Stapleton Segal Cochran LLC, which has offices in Philadelphia and Marlton, represented the National Fair Housing Alliance, the nonprofit Housing Equality Center of Pennsylvania, and POWER Interfaith, the Pennsylvania faith-based community organizing network.
“This is a victory for the West and Southwest Philadelphia communities who fought hard for these protections just two years ago,” Rachel Wentworth, executive director of the Housing Equality Center, said in a statement released Thursday. “For decades, banks of all kinds have used redlining to deny neighborhoods of color access to wealth and opportunity, and this ruling signals that lending discrimination will not be tolerated in our communities.”
The Justice Department said in its motion requesting an early end to the agreement that ESSA Bank “has demonstrated a commitment to remediation,” including disbursing required loan subsidies, and is “substantially in compliance” with other terms of the court order.
But Baylson noted that during oral arguments this week, the civil rights organizations “emphasized that a risk-averse institution like ESSA is unlikely to continue complying with the terms of a terminated” agreement.
And, Baylson said, “ESSA’s counsel admitted uncertainty as to whether ESSA would maintain those activities.”
The bank did not respond to a request for comment.