Two votes taken in 2018 are especially emblematic of the unconscionable willingness of many lawmakers to enable racial discrimination in lending, and other means of extracting wealth from people of color, women, and especially women of color.
In May 2018, Congress used a Congressional Review Act resolution—in a party line vote in both chambers—to repeal a CFPB action: the agency’s 2013 guidance on indirect auto lending. This guidance affirmed that it is illegal for auto lenders to use compensation systems that result in borrowers of color being charged higher rates and fees for auto loans—a systematic practice in the industry. This was the first use of the Congressional Review Act to undo guidance, rather than a rule. The Congressional majority chose to use this aggressive tactic to make it easier for auto lenders and auto dealers to continue to charge racial minorities more to buy a car.
May 2018 also saw final passage of the “Bank Lobbyist Act” (S. 2155), the broadest deregulatory measure since the financial crisis. The bill was put together by Senator Mike Crapo (ID), who chairs the Senate Committee on Banking, Housing, and Urban Affairs. Supporters portrayed this legislation as a modest effort to provide regulatory relief for “community banks.” In fact, it includes many dangerous provisions that have nothing to do with small community banks. Under that innocent-sounding cover, members of Congress voted to end the enhanced oversight of 25 of the country’s 38 biggest banks—institutions with up to $250 billion in assets, which collectively received almost $50 billion in bailout money during the financial crisis.
In a move that got surprisingly little attention, S. 2155 also rolled back protections against predatory or racially discriminatory lending, especially in rural and lower-income communities. It made it easier for lenders to rip-off manufactured homebuyers, and exempted 85 percent of U.S. banks from full reporting of loan data under the Home Mortgage Disclosure Act. Hiding this data will make it much harder for authorities, communities, and journalists to gather evidence of unfair lending, and easier for banks to continue well-documented patterns of lending discrimination.
The overt brand of racism fueled by industry lobbyists is not coming from the radical fringe, either: it enjoyed enough support in both houses of Congress to pass legislation. The auto lending resolution, which makes it easier to discriminate against people of color on car loans, passed with 51 Senators and 234 Representatives voting for it, all Republicans. However, the Bank Lobbyist Act, which enables home mortgage discrimination, passed the House with the support of 225 Republicans and 33 Democrats, and passed the Senate with the support of 50 Republicans and 17 Democrats.
While Congress is voting to make it easier for lenders to discriminate against people of color who seek to own a home or a car at the behest of powerful interests, their voters could not feel more differently. Overwhelming majorities of nearly every group of voters support holding financial companies accountable if they discriminate against people because of their race or ethnicity (94% of Democrats, 89% of Independents, and 81% of Republicans). And 76% of likely voters say they would be more willing to vote for a candidate who tackles racial discrimination in lending.
“House Votes to Dismantle Bias Rule in Auto Lending,” by Alan Rappeport, New York Times, May 8, 2018.
“Senate Votes to Ease Restrictions on Auto Lending Discrimination,” by Alan Rappeport, New York Times, April 18, 2018.
“Auto Lending,” Americans for Financial Reform (resources page).
“The bank deregulation bill the Senate just passed, explained. Instead of acting on immigration or guns, the Senate is deregulating banks.” by Emily Stewart, Vox, March 14, 2018.
“Letters to Congress: AFR Urges House Members to Oppose S. 2155 in Order to Preserve Financial Protections.” Americans for Financial Reform, May 18, 2018.
“Pinklining: How Wall Street’s Predatory Products Pillage Women’s Wealth, Opportunities & Futures,” by Suparna Bhaskaran, ACCE, NJCU and ISAIAH, June 2016.