A Minnesota bank at the center of a major legal fight concerning alleged discrimination in home mortgage lending has reached a settlement with the U.S. Department of Justice.

Under the settlement, KleinBank will expand its banking services in predominantly minority neighborhoods in the Minneapolis area. The bank will also commit $600,000 to loan subsidies and marketing in the new service area. And an executive will oversee efforts to increase lending in minority neighborhoods.

The KleinBank lawsuit was an effort by the Obama administration to move the goalposts and make it easier to prosecute redlining based on a lower standard of proof, said Ballard Spahr attorney John Culhane, who counsels banks on fair lending compliance.

"They were definitely pushing the envelope with these arguments," he said.

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