Newark Activists Spotlight 'Redlining' Case As 2 Banks Try To Merge

NEWARK, NJ — It wasn’t long ago that federal authorities announced they reached an agreement with Lakeland Bank involving one of the largest “redlining” settlements in the history of the U.S. Department of Justice. The housing discrimination allegedly took place in Black and Hispanic neighborhoods of the Newark area over a period of three years, raising an outcry from local activists when it was made public in December.

And according to advocates in the Brick City, the Federal Reserve needs to keep this in mind as the bank attempts to merge with Jersey City-based Provident Bank.

Newark Mayor Ras Baraka was among those on hand at a news conference on Tuesday, which was held to demand that more oversight is added to the merger deal between the two financial powerhouses (watch the video below).

That includes additional local provisions for Newark, which suffered the brunt of Lakeland Bank’s alleged redlining, according to advocacy group New Jersey Citizen Action. Read More: Bank 'Redlined' NJ Home Buyers In Newark Metro Area, Feds Allege

What is redlining? According to the U.S. Department of Justice:

“Redlining is an illegal practice in which lenders avoid providing services to individuals living in communities of color because of the race or national origin of the people who live in those communities.”

Last September – a month prior to the settlement announcement – Lakeland Bancorp Inc. announced plans to merge with Provident Financial Services Inc., creating a “super-community bank” which will be headquartered in Iselin, New Jersey. The all-stock merger is valued at approximately $1.3 billion.

According to Lakeland Bank, the merger is expected to close in the second quarter of 2023.

Lakeland Bank agreed to several conditions as part of the Justice Department’s deal, including investing at least $12 million in a loan subsidy fund for residents of Black and Hispanic neighborhoods in the Newark area, and opening new branches in “neighborhoods of color.”

Now, New Jersey Citizen Action (NJCA) and other advocates are urging the Federal Reserve Bank of New York to include a “New Jersey-specific” community reinvestment act agreement as a condition to the merger, cementing the pledges that Lakeland Bank made as part of the federal settlement.

“Lakeland’s systemic failure toward low- and moderate-income (LMI) and Black, Indigenous and people of color (BIPOC) consumers in the Newark area demands a CRA agreement to not only restore equity, but reverse the damage they have caused,” NJCA President Phyllis Salowe-Kaye said.

That sentiment was echoed by the city’s mayor.

“I join with NJCA in asking the Federal Reserve to only approve the merger of Provident and Lakeland if there is a CRA agreement that includes the $13 million consent order between the Department of Justice and Lakeland regarding its illegal redlining,” Baraka said.

Since the Bick City was “most impacted by Lakeland’s redlining,” the CRA agreement should also include all of the NJCA’s recommendations that are Newark-specific,” he added.

Those recommendations include:

• Hold at least two town hall meetings in the City of Newark to assess community needs before deciding the location of the new branch required in the consent order
• Invest in the acquisition fund established in the mayor’s equitable growth initiative to mitigate the effects of owner-occupied homes being purchased by large scale investors
• Participate in the “Live Newark Program” to assist first time homebuyers in the city
• Invest in the “Neighborhood Development Fund” that turns city-owned land into residential and affordable housing

State-level recommendations from the group include:

• Develop specific and measurable goals to provide below market mortgages, discounted home improvement loans, small business loans, construction and permanent financing and loans for community and economic development
• Establish a statewide Community Advisory Board (CAB) composed of diverse community leaders who work with the LMI BIPOC population
• Work with the CAB and other community organizations to determine if additional branches or services are needed if the merger results in branch closures
• Develop a transparent process that includes community input when determining where to locate the second branch required in the Department of Justice Consent Order
• Establish “Listening Sessions” with high level key bank staff to provide them with information on the needs of the LMI BIPOC community
• Invest in the “NJ Forty Acres and a Mule Fund” (NJ FAM FUND) for real estate and small business development for Black and Latino partners

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