When Republic First Bank failed last spring, the New Jersey attorney general's office was already more than a year into an investigation of the Philadelphia-based bank's lending to minority borrowers.
The Garden State's probe wrapped up this week with the release of a report that alleges the bank, known as Republic Bank, engaged in unlawful mortgage redlining practices between 2018 and 2022. Now the question is: What, if anything, should be done to help the victims of its alleged discrimination?
When Republic
The New Jersey attorney general's office is now asking both the FDIC and Fulton to assume some responsibility for redressing past wrongs.
With respect to the FDIC, the attorney general's office said it has submitted a claim seeking monetary relief for New Jerseyans who were harmed. David Barr, an FDIC spokesman, said in an email that the agency does not discuss individual claims or creditors of failed banks.
Todd Phillips, a former FDIC lawyer who is now a professor at Georgia State University, said that the state of New Jersey would need to prove to the FDIC's satisfaction that it had a claim against Republic, and that it could attempt to do so at a hearing.
"But because I don't think there is any money left, I doubt this will actually happen," Phillips said in an email.
Fulton says it has a good track record
The New Jersey attorney general's office also said that it has shared its investigative findings with Fulton, and that it has urged the bank to take "proactive steps" to mitigate any potential redlining risks stemming from its acquisition of Republic's assets.
"At this time, Fulton has not identified additional steps it plans to take," the AG's office stated in its report.
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"At Fulton Bank, we have a long history of supporting all communities including majority minority neighborhoods, and we believe transitioning former Republic assets and team members to our operating model is the best course of action to ensure the American dream is attainable for all customers, in New Jersey and across our five-state footprint," the bank's spokesman said.
The AG's office said it will monitor Fulton's mortgage loan performance to ensure there is no continued harm to the state's Black, Asian and Hispanic communities.
Advocates say the acquirer should do more
Leila Amirhamzeh, director of community reinvestment for New Jersey Citizen Action, a statewide advocacy organization, expressed hope that Fulton will work with her group to address the needs of New Jerseyans.
"In taking on those assets, we hope that really means they'll increase their commitment to New Jersey communities, and in particular the communities that were harmed," Amirhamzeh said, noting that New Jersey Citizen Action has worked with Fulton in the past.
Jesse Van Tol, president and CEO of the National Community Reinvestment Coalition, argued that Fulton has a responsibility to address the wrongs of its predecessor bank.
"I think they should have a stronger approach than just, 'We're a better bank, nothing to worry about,' which is essentially what they're saying," Van Tol said.
He argued that Fulton, which in April assumed responsibility for substantially all of Republic's deposits, should think of itself as having taken on not only the failed bank's financial liabilities, but also its legal and reputational liabilities.
Van Tol pointed out that Fulton now operates Republic's New Jersey branches, which the attorney general's office said were concentrated in predominantly white areas.
"It is a question of what branches do you have and where, and what staffers do you have and where," Van Tol said.
Attorney general says lending disparities were 'severe'
In its 18-page report, the New Jersey attorney general's office used Home Mortgage Disclosure Act data to calculate that Republic's peer lenders made loans to Black borrowers at over 1.5 times the rate Republic did.
The peer lenders were about 2.5 times more likely than Republic to make loans to Asian borrowers. And the discrepancy was more than threefold for Hispanic borrowers, according to the report.
"The disparities in Republic's lending to borrowers of color were severe — so severe that Republic should have known that its practices were systematically resulting in the exclusion of borrowers of color. Yet Republic continued to maintain these practices," the AG's report stated. "In fact, between 2018 and 2022, the disparities resulting from these practices only continued to worsen."
The AG's report found that Republic failed to locate any of its 20 New Jersey storefront branches or mortgage offices in a majority-minority neighborhood.
"It is shameful that Republic engaged in practices that redlined neighborhoods based on the race or national origin of the neighborhood's residents," New Jersey Attorney General Matthew Platkin said in a press release.
The Republic case is the third instance in recent years of alleged redlining by a bank operating in New Jersey. In September 2022, the Department of Justice reached
And last month, OceanFirst Bank agreed to
