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Treasurer re-evaluating R.I.’s relationship with Washington Trust bank after redlining allegations

General Treasurer Diossa notes the state has $190 million deposited with the Westerly-based bank, and vows to press it to go beyond the terms of its settlement with the US Attorney’s Office

Rhode Island General Treasurer James A. Diossa speaks Thursday during State House news conference, saying he will re-evaluate the state's relationship with Washington Trust Company in light of alleged discriminatory lending.Edward Fitzpatrick

PROVIDENCE — Rhode Island General Treasurer James A. Diossa on Thursday said he will re-evaluate the state’s relationship with The Washington Trust Company in light of redlining allegations, noting that state government has nearly $190 million deposited with the bank.

Diossa held a State House news conference one day after Rhode Island US Attorney Zachary Cunha and US Assistant Attorney General Kristen Clarke announced that Washington Trust has agreed to pay $9 million to resolve allegations that the bank engaged in lending discrimination by redlining majority Black and Hispanic communities in Rhode Island for years. The settlement is subject to court approval.

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Washington Trust has denied the allegations, saying it entered into the agreement “solely to avoid the expense and distraction of potential ligation and to allow the bank to focus fully on serving the needs of its customers and communities.”

But Diossa said he found the allegations “disappointing” and “disheartening.”

“As the oldest community bank in the nation, Washington Trust must be held to a higher standard,” he said. “As a result, my office will evaluate our banking relationship and all the state’s business with Washington Trust and hold them accountable going forward to make sure they rectify the issues brought forward by the Department of Justice.”

Diossa did not explicitly threaten to pull the $190 million in state money from the bank.

But he said he planned to have “a very serious conversation” with Washington Trust chairman and chief executive officer Edward O. “Ned” Handy III later on Thursday, and he said he would press the bank to go beyond what it has agreed to in the settlement “to help out these communities that have been impacted.”

Before winning the treasurer’s race in 2022, Diossa was the first Latino mayor of Central Falls, an impoverished, 1.3-square-mile majority-Latino city. And he said he knows there is a lot that could be done to increase home ownership, create opportunities for businesses to open or expand, and to increase the level of financial literacy among residents.

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As state treasurer, Diossa said it’s his duty to protect the state’s assets and to “encourage financial growth for all our residents.”

“When Rhode Island families in any ZIP code are denied access to fair lending opportunities, it becomes much harder for them to achieve financial success and build generational wealth — we need to be creating homeownership opportunities for all Rhode Islanders, not restricting them,” he said.

Diossa cited an Urban Institute study showing that while 70 percent of white Rhode Islanders own their own home, only 38 percent of Black Rhode Islanders, and 32 percent of Hispanic Rhode Islanders are homeowners.

He said he had an initial conversation with Handy on Wednesday night, and the two were meeting at the State House late Thursday morning.

“We just want to make sure that outside of what they consented to that they are doing more in these communities, and we want to be working with them to make sure that it happens,” he said. “Whatever we agree to, we will make sure to inform all of you.”

Under the proposed consent order, which is subject to court approval, Washington Trust has agreed to invest $7 million in a loan subsidy fund to increase access to home mortgages, improvements, refinancing, and equity loans and lines of credit for residents in majority Black and Hispanic neighborhoods in Rhode Island. The company agreed to spend $1 million on community partnerships to provide services that increase residential mortgage credit access, and another $1 million on advertising, outreach, consumer financial education and credit counseling in those neighborhoods.

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Diossa said his message to the impacted communities is: “We are going to hold them accountable.”

“These types of behavior impact any growth in any community of color, and that’s why we have seen disproportionate home ownership rates, disproportionate wealth in these communities,” he said. “That is not something I am going to stand by.”

Washington Trust Executive Vice President Elizabeth B. Eckel, the bank’s chief marketing and corporate communications officer, said, “We greatly value our long-term relationship with the state of Rhode Island, and look forward to working collaboratively with General Treasurer James Diossa and his team. We appreciate General Treasurer Diossa’s important efforts in this area, and we plan to work together to provide the opportunity for home ownership for all people in all the communities we serve in our state.”

While the state has nearly $190 million deposited with Washington Trust, it has much more money in other locations. The treasurer’s office provided a breakdown of where Rhode Island has $3.4 billion deposited. For example, it has $1.6 million in the Ocean State Investment Pool, which is now managed by Fidelity Investments, and it has $628 million in TD Bank, $422 million in Santander Bank, and $295 million in Citizens Bank.

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This story has been updated with a statement from Washington Trust Executive Vice President Elizabeth B. Eckel.


Edward Fitzpatrick can be reached at edward.fitzpatrick@globe.com. Follow him @FitzProv.