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Capital Business
Posted at 04:59 PM ET, 05/14/2012

DOJ ends investigation of Cardinal Bank

The Justice Department has ended a 10-month investigation into lending discrimination claims at Cardinal Bank in McLean, according to a Securities and Exchange Commission filing issued Monday.

Cardinal, a $2.6 billion-asset bank with 27 branches primarily in Northern Virginia, was accused of failing to serve minority communities equitably following its 2004 acquisition of George Mason Mortgage. The Justice Department informed the bank on May 11 that it had concluded its review and had no intentions of filing a lawsuit.

“We cooperated fully, provided all of the information and in the end I guess that’s what did it,” said Bernard Clineburg, chairman and chief executive of Cardinal.

Clineburg was puzzled by the agency’s decision investigate the bank as the Federal Deposit Insurance Corp. made a similar inquiry five years ago, and then in 2010 gave Cardinal a satisfactory Community Reinvestment Act rating — a gauge of whether banks are lending to minorities.

In recent weeks, George Mason Mortgage has opened its first office in Prince George’s County and Baltimore — two areas with high concentrations of African Americans.

Cardinal was one of several banks across the country that the Justice Department investigated for discrimination. The agency’s actions drew criticism from industry trade groups such as the Independent Community Bankers of America, which accused the department of targeting institutions with strong track records in minority communities and forcing them to lend to unqualified borrowers.

A number of community groups, however, said the increased scrutiny is needed to prevent biased practices used by lenders in the run-up to the housing meltdown.

By  |  04:59 PM ET, 05/14/2012

 
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