The Senate Banking Bill Plays an Appalling Shell Game on Race

Banks are required to collect racial data on their loans so that regulators can make sure they aren’t discriminating against blacks and Hispanics. But the banking industry discriminated anyway during the housing bubble of the aughts, claiming that the differences were due to low credit scores, not redlining. So when Dodd-Frank passed in 2010, it required banks to collect more information. This was reasonable: if the real reason is credit scores, then let’s see the credit scores.

Needless to say, banks didn’t like this, and as soon as Mick Mulvaney took over the Consumer Finance Protection Bureau, he set about gutting the rule. But that wasn’t enough. Now, in one of the most egregious rollbacks of Dodd-Frank regulations, Congress plans to eliminate this requirement:

For decades, banks have been required under the 1975 Home Mortgage Disclosure Act to report borrowers’ race, ethnicity and Zip code so officials could tell whether lenders were serving the communities in which they are located and identify racist lending practices such as redlining. But discriminatory practices continued, with the financial industry disproportionately targeting black and Hispanic borrowers with subprime mortgages loaded with high fees and adjustable interest rates that skyrocketed after the stock market crashed in 2008.

….Lenders were supposed to start gathering extra information about borrowers’ ages and credit scores, as well as interest rates and other loan-pricing features in January….But [Mulvaney] said the agency plans to reconsider the new requirements, and that banks would not be penalized for data collection errors in 2018. He also stripped the bureau’s fair-lending office of its enforcement powers. The Senate bill would repeal many of the new reporting requirements, exempting small lenders making 500 or fewer mortgages a year from the expanded data disclosure.

This is ridiculous. Loan data in modern banks is kept on a new invention called a “computer.” All the data is already there, and providing it just means grabbing a few more fields from a database. The real reason for eliminating this requirement has nothing to do with the burden it places on community banks. It’s there so that these banks can continue to discriminate and then pretend that there’s not really any discrimination—and we’d all understand that if we only saw all the other loan data.

What a con. And a dozen Democrats are supporting this.


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