Feds say this Minnesota bank doesn't serve people who live in minority neighborhoods

It's called redlining, and it's illegal.

A Minnesota bank is being sued by the Department of Justice for discriminating against minorities.

In a lawsuit filed Friday, the Department of Justice says Chaska-based KleinBank denied or avoided providing its mortgage-lending services to people who live in neighborhoods where the majority of residents are minorities.

The lawsuit says KleinBank made loans in minority neighborhoods four times less than the rate of comparable lenders.

Federal officials allege KleinBank excluded minority neighborhoods from its service area; it's branches and mortgage loan officers were located in white neighborhoods, but not in minority ones; and it targeted its marketing and advertising toward residents who live in white neighborhoods.

This is called "redlining" and it's a violation of the Fair Housing Act and Equal Credit Opportunity Act, a news release says.

“Redlining produces an unequal and unlevel playing field for borrowers in minority neighborhoods,” Principal Deputy Assistant Attorney General Vanita Gupta, head of the Civil Rights Division, said in the release. “Cases like this one demonstrate the Justice Department’s strong commitment to hold banks accountable for continuing and perpetuating historic trends of inequality in residential mortgage lending.”

GoMN has reached out to KleinBank for comment, but it is closed Monday for the Martin Luther King Jr. federal holiday.

KleinBank opened in Minnesota in 1907, and now has 21 branches and 400-plus employees, with assets totaling $1.8 billion, the bank's website says. The bank lists several awards, including ethics awards, being the best mortgage company and best bank.


Redlining became a common practice after it was introduced back in 1934. The Home Owner's Loan Corporation drafted maps of communities to show which areas were worthy of getting loans. They were ranked and color-coded, with minority neighborhoods typically getting rated a D or "hazardous" and were outlined in red, NPR said

The program was celebrated for guaranteeing loans for white people, but refused to back loans for black people or people who lived near in predominately black neighborhoods, The Atlantic reported.

The practice of redlining spread throughout the mortgage industry, and lasted until 1968 when the Fair Housing Act was introduced. Redlining created the neighborhoods we live in today, and you can see it all on this interactive map, which includes Minneapolis and Duluth. It shows the redlined neighborhoods and includes information on why the neighborhoods got each ranking.

Next Up

Alibi Drinkery in Lakeville.

Minnesota Department of Health files lawsuit against Alibi Drinkery

The Lakeville bar has been in the news for defying orders.

Iron Tap snowmobile delivery

This MN restaurant will deliver to your ice house... on a snowmobile

Just in case you work up an appetite fishing on Lake Waconia.

Klobuchar and Trump

Klobuchar reacts to report Trump plotted against his attorney general

The NYT story alleges further tactics to overturn the election.

snow, plow

Snowy Saturday: Here's how much snow is forecast in Minnesota

Snow will reach the metro area by the early afternoon.

Cam Talbot

Wild improve to 4-1 with victory over Dubnyk, Sharks

The 4-1 win gives the Wild four victories in five games to start the season.

Screen Shot 2021-01-22 at 9.08.16 PM

Daughter of MN Supreme Court Justice, Allina Health CEO found dead in Iowa

The 21-year-old was found dead in the parking lot of a sorority, according to police.

Screen Shot 2020-09-04 at 8.42.40 PM

Federal charges: MN marijuana lobbyist threatened U.S. representative

"I want you to be as scared as possible," the voicemail allegedly says.

coronavirus, masks, covid-19

Wisconsin Republicans aim to end governor's mask mandate

They've introduced a resolution to remove the governor's emergency powers.

Ted Schweich

Community group hopes to install billboard to get neighbor a kidney

A group called "Team Ted" aims to raise $5,000 to find their friend a kidney donor.

Andrew Palmer

Charges: Coach raped teenage girl on Minnesota basketball team

The 33-year-old head coach has been charged in connection to the alleged crimes.


Trump says 'stop it' to supporters who are harassing minorities

Several incidents of hate speech and harassment has been reported in Minnesota, too.

It's also a big weekend for people who shop but don't pay

Losses and arrests go up in November and December

Feds close Minnesota bank

The FDIC shutdown Patriot Bank in Forest Lake Friday. First Resource Bank in Savage agreed to take over the assets and deposits from the failed Minnesota bank. There have been seven U.S. bank failures in 2012. Patriot Bank is the first to fail in Minnesota this year.

St. Anthony PD is being reviewed by the feds at its own request

They'll review how officers interact with the community.

Black bicyclists are likely stopped by police more than white bicyclists, report says

It's likely that black bicyclists are stopped and cited more often for minor violations than white bicyclists.

Minnesota's TCF Bank to merge with Detroit-based bank

The TCF name is staying, with Detroit's Chemical Bank changing its name.

Fed says Minnesota banks almost back to normal after financial crisis

An executive with the Federal Reserve Bank of Minneapolis says profits and the quality of loans held by Minnesota banks are almost back to their historical averages. Those still hurting are mainly Twin Cities area banks that invested in commercial real estate in outer-ring suburbs.