Communities will fight industry push to duck fair lending laws
Not even one month into the new administration, there is already a burgeoning push from the financial services sector to ease off the enforcement of laws to prevent discrimination in lending. This effort is both shameless and shameful.
In a recent statement, the Independent Community Bankers of America (ICBA) asked the new administration to limit the application of fair lending laws, calling their enforcement “overzealous.” Federal regulators have been active in penalizing financial institutions for fair lending violations because such violations sadly remain a harmful reality in the marketplace. If banks don’t want to face enforcement actions, they should follow the law.
{mosads}It’s clear that many institutions aren’t, by the number of penalties leveled at a variety of banks in recent years by the Consumer Financial Protection Bureau (CFPB) and the Departments of Justice and Housing and Urban Development.
Between 2011 and 2016, these agencies settled over a dozen cases of redlining and other lending discrimination. Redlining is still alive, and fair lending laws are a critical line of defense against these types of practices. If anything, fair lending scrutiny and enforcement should be increased.
This push for eased enforcement is accompanied by a broader effort to roll back consumer protections and financial regulations. President Trump has issued an executive order to begin to roll back Dodd-Frank. Previously, Financial Services Committee Chairman Jeb Hensarling (R-Texas) spearheaded the so-called Financial CHOICE Act, a bill to repeal many of the Dodd-Frank reforms that protect consumers from financial abuses and make our financial system safer. That effort, and others to take away sensible, important regulations are looming and cannot be allowed to take hold. Dodd-Frank, and the many improvements and safeguards it put in place, is what stands between us and another surge of predatory lending and risky, abusive practices that could once again create a crisis. The law, and the Consumer Financial Protection Bureau, must remain in place.
When whole communities and neighborhoods are closed off from access to responsible mortgage and small business lending through redlining, the impact is devastating. Homeownership is the single greatest path to building wealth, but currently homeownership rates are at a fifty-year low. This is a lost opportunity to create wealth that could be used to create small businesses, leading to new jobs, or fund college educations. The reliable availability of responsible and safe financial services stabilizes neighborhoods, strengthens communities, and paves the road to a fair and just economy for all Americans.
Financial services industry lobbyists should remember that fair lending laws and consumer protection laws are in place for a reason. If attempts are made to scale back or remove them, the reaction from communities and community groups will be fierce.
This is a true test for the Trump Administration’s assertion that the President’s commitment is to the little guy. Financial institutions cannot discriminate against creditworthy borrowers. The law is the law.
John Taylor is the President and CEO of the National Community Reinvestment Coalition
The views expressed by this author are their own and are not the views of The Hill.
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