Home>Local>Essex>Justice Department reaches settlement with Lakeland Bank over bank’s redlining practices

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Justice Department reaches settlement with Lakeland Bank over bank’s redlining practices

Bank came under fire in 2017 for Frelinghuysen-Avelenda controversy

By Joey Fox, September 28 2022 12:53 pm

This morning, U.S. Attorney for the District of New Jersey Philip Sellinger and Assistant Attorney General Kristen Clarke announced that the Justice Department has secured an agreement with Lakeland Bank to address allegations of redlining in and around Newark.

According to the department, Lakeland systematically gave out fewer loans in predominantly Black and Hispanic communities, resulting in an estimated loss of $120 million in loans for members of those communities. The bank has nearly 40 branches across Essex, Somerset, and Union Counties – but according to Sellinger, not a single one of those branches is in a Black or Hispanic area.

“If you lived in a Black or Hispanic neighborhood in these counties, you likely had little opportunity to apply for, let alone obtain, a mortgage from Lakeland Bank,” Sellinger said at a press briefing. “In fact, you probably never even saw a Lakeland branch in your community.”

The bank has pledged to create a $12 million loan subsidy fund and open at least two new branches in communities of color, among other things, under the proposed consent order; the Justice Department said that this represents the third-largest redlining-related settlement ever.

For those who closely follow New Jersey politics, Lakeland Bank is perhaps best known for a 2017 controversy involving then-U.S. Rep. Rodney Frelinghuysen (R-Harding) and now-Democratic State Committee executive director Saily Avelenda.

In early 2017, Avelenda became a member of the anti-Frelinghuysen progressive group NJ 11th For Change while also working as assistant general counsel at Lakeland. Frustrated with the group’s activism, Frelinghuysen wrote a letter to a bank board member in May that included a handwritten note at the bottom mentioning that a “ringleader” working against him was employed by the bank.

Avelenda was confronted by her superiors at the bank, and while she was not directly asked to leave, the incident was a factor in her ultimate resignation. She became the executive director of the NJDSC in February 2020.

Frelinghuysen – who would announce his retirement early the next year – said in response to the controversy that he was “unaware of the particulars” of Avelenda’s employment at the bank. 

“The Congressman wrote a brief and innocuous note at the bottom of a personal letter in regard to information that had been reported in the media,” Frelinghuysen’s office told WNYC.

Unrelatedly, Lakeland announced yesterday that it has entered into a merger agreement with Provident Financial Services; Clarke said that the planned merger won’t affect the consent order, since it also binds any possible successors to Lakeland.

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