PROVIDENCE – General Treasurer James A. Diossa on Thursday announced his office will evaluate the state’s relationship with The Washington Trust Co., the Westerly-based institution that currently holds $190 million in state deposits.
The announcement comes in the wake of Washington Trust agreeing to a $9 million settlement with the U.S. Department of Justice Wednesday to resolve allegations it engaged in discriminatory lending from 2016 to 2021 by redlining Black and Latino neighborhoods in Rhode Island. The bank denied the allegations and said it entered into the agreement to avoid legal costs.
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During a press conference at the Statehouse Thursday, Diossa did not rule out the possibility his office would close the state’s Washington Trust accounts, saying he is meeting with Edward O. “Ned” Handy III, CEO and chairman of parent company Washington Trust Bancorp Inc. later today and anticipates additional meetings with senior executives.
Calling the bank a “prominent corporate citizen” and a “valued banking partner,” Diossa said he was “very disappointed” in the allegations by federal prosecutors.
Diossa said he was unaware of issues with the bank or the federal investigation until Wednesday’s announcement. Potential agreements with the state could include initiatives to increase homeownership, small-business creation and the funding of financial literacy programs for residents of minority neighborhoods.
“[Washinton Trust] must be held to a higher standard,” he said, alluding to the state’s decadeslong relationship, which “doesn’t preclude them from being held accountable for their actions.”
The review is meant “to make sure they rectify the issues brought forward by the Department of Justice,” he said. “These types of actions are not acceptable. These types of behaviors impact any growth in any community of color. The redlining hurt communities where I grew up.”
The third-largest bank in Rhode Island, Washington Trust has $5.24 billion in deposits as of July. Spokesperson Elizabeth Boyle Eckel said Thursday that the bank welcomed the discussions.
“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,” she said in a statement. “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.”
The DOJ settlement includes requiring the bank to employ a director of community lending and open two new branches in majority-Black and Hispanic neighborhoods, each with dedicated loan officers; mandates a minimum $7 million investment in a loan subsidy fund; $1 million on community partnerships that increase residential mortgage credit access for residents of those neighborhoods; and $1 million for advertising, outreach, consumer financial education and credit counseling.
Diossa noted that a study by the Washington, D.C.-based Urban Institute that showed 70% of white Rhode Islanders own their home, compared with 38% of Black and 32% of Hispanic Rhode Islanders are homeowners.
(Update: Corrects lead and headline to evaluate)
Christopher Allen is a PBN staff writer. You may contact him at Allen@PBN.com
Diossa should stay out of financial issues that are well beyond his intellectual capacity. WashTrust is one of the few remaining institutions founded in and remaining in RI. Founded in 1800, Washington Trust is the oldest community bank in the nation and one of the Northeast’s premier financial services companies. Rhode Islanders should be proud of it.
Kudos to WashTrust for fulfilling its fiduciary responsibility to its depositors and shareholders by deploying their assets wisely instead of foolishly risking them on phony politically driven “social equity” initiatives.
Shame on Washington Trust and their bigoted “redlining” and HOORAY for Treasurer Diossa for standing up for equality for all and HOORAY for the Federal Government for prosecuting this case and ensuring that the boys’-club racism of redlining will be called out every time it is found no matter the place it is found!
If you were innocent you would have fought such SCANDALOUS allegations. It’s one thing to settle financial improprieties, it’s a whole ‘nother allegation when you’re accused of racist policies and actions!
It’s disgraceful that you violated the Constitutional rights of Black and Latino Rhode Islanders with redlining and in so doing violated the trust of all Rhode Islanders.
Time for Treasurer Diossa to move towards DECREASING the amount of money Washington Trust now holds for the state until the bank can PROVE that they are committed to ALL Rhode Islanders, not just the White and privileged ones.