United States v. ESSA BANK & TRUST
2:23-cv-02065
| E.D. Pa. | Jul 24, 2025Background
- The U.S. sued ESSA Bank & Trust in 2023, alleging unlawful redlining and discriminatory mortgage lending practices affecting majority-Black and Hispanic neighborhoods in the Philadelphia area.
- An FDIC examination suggested ESSA engaged in redlining, which led to a Department of Justice referral.
- The parties entered into a Consent Order in June 2023, requiring extensive remedial actions by ESSA over a minimum five-year period, including compliance, community programs, and financial commitments.
- In June 2025, the U.S., without opposition from ESSA, moved to terminate the Consent Order and dismiss the action, claiming substantial compliance and remediation.
- Amici organizations opposed early termination, arguing continued oversight was necessary for thorough remedy and public interest.
- The court denied the motion, holding that outstanding requirements remained and full compliance with the Order’s term was essential to remedy and prevent discrimination.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether partial compliance warrants early termination | ESSA has fulfilled main commitments, including loan subsidy | ESSA has acted in good faith and mostly complied | Early termination is unwarranted; purpose not yet achieved |
| Whether spending down the subsidy fund is dispositive | Completion fulfills main Consent Order obligation | Expedited spending shows compliance | Not a significant change; continued obligations are vital |
| Whether substantial compliance exists | Substantial compliance achieved, making prospective oversight unnecessary | Has met requirements sufficiently | Not substantially complied; multi-year terms unmet |
| Impact on public interest | Early termination avoids excessive burden on financial institutions | No public harm in ending order | Continued enforcement serves public & federal interests |
Key Cases Cited
- Gonzalez v. Crosby, 545 U.S. 524 (2005) (final judgments serve an essential role and should only be set aside in narrow circumstances)
- Rufo v. Inmates of Suffolk Cnty. Jail, 502 U.S. 367 (1992) (modification or vacatur of consent decree requires significant change in facts or law)
- Democratic Nat. Comm. v. Republican Nat. Comm., 673 F.3d 192 (3d Cir. 2012) (sets out the factors and burden for modifying or vacating consent decrees)
- Bldg. & Const. Trades Council of Phila. & Vicinity, AFL-CIO v. N.L.R.B., 64 F.3d 880 (3d Cir. 1995) (courts weigh hardship against benefits to determine if injunction/consent order objectives are fulfilled)