The investigation adds a new challenge in the bank’s long-delayed sale to M&T Bank, which was also accused of discriminatory lending practices in February.
Hudson City Bancorp faces a U.S. government investigation into discriminatory lending practices, posing a potential new hurdle in the bank’s long-delayed sale to M&T Bank Corp.
The Justice Department and Consumer Financial Protection Bureau (CFPB) are examining whether 147-year-old Hudson City Bancorp violated the Fair Housing Act. A preliminary CFPB review showed that the firm denied loans to people in minority communities, including those in the New York area, according to Bloomberg.
In February, M&T Bank was also accused of discriminatory lending practices by a New York nonprofit group The Fair Housing Justice Center.
It’s unclear how the investigation, which is in the preliminary stages, could affect the proposed transaction, which has been held up for almost three years because regulators weren’t satisfied with M&T’s anti-money-laundering controls, according to Bloomberg.
