Dive Brief:
- KeyBank agreed to engage in a third-party racial equity audit to assess the impact of its diversity and inclusion practices both inside the company and in the communities it serves, the bank announced Thursday.
- The move comes roughly a month after fair-lending groups and 80 local community organizations sent a letter to federal regulators asking for an investigation into alleged redlining in the bank’s mortgage lending practices.
- The audit will be conducted by Washington-based Covington & Burling, the law firm that performed racial equity audits for Wells Fargo and Citi.
Dive Insight:
The National Community Reinvestment Coalition asked the Federal Reserve and the Office of the Comptroller of the Currency to downgrade KeyBank’s Community Reinvestment Act rating in a letter March 31.
The NCRC published a report in November asserting that KeyBank had the lowest percentage of mortgage originations to Black borrowers among the top 50 mortgage lenders in 2021.
KeyBank pledged in writing to support nonwhite and low- to middle-income communities, but the report highlighted that the share of home purchase loans going to LMI borrowers dropped by double-digit percentages between 2018 and 2021.
“KeyBank knew they violated their promises to marginalized communities, but chose to mislead the public last winter anyway — choosing to prioritize damage control over doing the right thing,” Jesse Van Tol, NCRC’s CEO, said Thursday in a statement. “Now they’re seeking an independent audit based upon those same facts they previously denied — a step typically taken when a corporation recognizes it has a problem.”
Covington & Burling’s assessment, expected to be released by the end of the second quarter in 2024, will include input from internal and external stakeholders, KeyBank said.
"We remain focused on delivering impactful and sustainable [diversity, equity and inclusion] programs and initiatives — inside and outside our company,” KeyBank CEO Chris Gorman said in a statement. “This critical work will make sure we continue to deliver better outcomes while investing in our teammates and the communities we proudly serve and call home."
The NCRC has called for an examination into “KeyBank’s compliance with public commitments made in connection with its acquisition of First Niagara Bank, including in its Community Benefits Agreement as well as job growth commitments made in KeyBank’s July 2016 agreement.”
“We firmly believe that KeyBank has failed to meet promises to Black communities, which is why they are among the worst banks for Black people who want to buy a home,” Van Tol said.
KeyBank declined an interview with American Banker on Thursday.
However, it said in a statement that it has "discussed the possibility of a racial equity audit with a number of stakeholders" including the Service Employees International Union, and has "decided to move forward with it at this time,” according to the publication.
"We believe this engagement is an important part of our journey to continue advancing our diversity, equity and inclusion priorities while identifying potential areas of opportunities," the bank said.
