The Indiana bank that bought Chicago’s First Midwest Bank faces claims of racial discrimination against mortgage borrowers in Indianapolis.
Old National Bank, which announced the $2.2 billion buyout in June, was sued by the Fair Housing Center of Central Indiana over claims that just 1.6 percent of the 2,250 mortgages it made in 2019 and 2020 were to Black buyers, Crain’sreported. Other banking institutions in the same market provided almost 15 percent of home loans to Black borrowers, in line with the proportion of the population.
While Old National CEO Jim Ryan has denied wrongdoing, the bank is still refusing to negotiate an agreement with Chicago fair-housing groups that would improve access to credit for those in disadvantaged communities. Those kinds of deals typically accompany bank mergers of this size.
First Midwest is primarily a business lender. It also originated $813 million of home loans in 2020, according to Securities & Exchange Commission filings. The merger has been approved by the U.S. Office of the Comptroller of the Currency and is awaiting a review by the Federal Reserve.
Advocacy groups have petitioned the Fed to block the merger in light of Old National’s refusal to negotiate. City officials, including Harry Osterman, a 48th Ward Alderman and chair of the City Council’s Housing Committee,, have also expressed concern about the merger.
Asked by Crain’s why Old National won’t negotiate the community deal, Ryan said such agreements “may make sense in some circumstances and are typically implemented at the discretion of each bank. Here, however, we did not feel it was necessary to enter into a community benefits agreement.”
[Crain’s] — Victoria Pruitt