Current Events > Provision Hidden in the Banking Bill Could Hurt Black Homeowners

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https://www.theatlantic.com/business/archive/2018/03/banking-bill-black-homeowners/555227/

Imagine two families in Mobile, Alabama, trying to buy a home. The households are similar in many ways. They have roughly the same income and employment history. They are seeking to buy similar three-bedroom ranches in comparable, quiet neighborhoods. They both want a loan from the same local bank, and both want to put down a similar, standard down payment. The only difference is that one family is white and the other is black. Today50 years after the passage of the Fair Housing Act, 40 years after the passage of the Community Reinvestment Act, and a decade after the subprime-loan crisisthat black family would be 5.6 times more likely to be denied a conventional mortgage than that white family, a damning report released last month by the Center for Investigative Reporting found.

Redlining and other forms of discriminatory lending practices remain a defining feature of the American housing market, and they have profound consequences in terms of wealth-building, equality, and equity. Yet a technical and mostly overlooked provision of a big piece of financial-regulatory legislation working its way through Congress might make such practices harder to identify, and thus harder for federal regulators to stamp out.

This week, Congress is considering a sweeping and complicated piece of law aimed at helping community and local banks. Its exact provisions are still uncertain, but the law will likely let smaller banks make certain risky investments; exempt certain institutions from a rule that restricts their lending, depending on what they hold in deposits; reduce the number of institutions labeled as systemically important; and put more responsibility on the Federal Reserve and other regulators to intervene in the event of a crisis. The Economic Growth, Regulatory Relief, and Consumer Protection Act is a rare bipartisan effort; given its support in both houses and both parties, its passage is all but certain.
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Then there are the provisions regarding redlining and discrimination in lendingones largely overlooked, but potentially important. The legislation in process includes a number of technical changes that stand to put borrowers of color, mobile-home owners, and rural residents at risk. Chief among these is a change letting banks that make fewer than 500 mortgage loans a year report less data to the government on who they lend to and at what ratesdata meant to help show whether financial institutions are discriminating against families of color. According to data from the Consumer Financial Protection Bureau, the legislation might exempt four out of every five banks and credit unions.

Supporters of the provision have argued that the vast majority of mortgage loans would still be covered by these reporting requirements, which stem from the 1975 Home Mortgage Disclosure Act (HMDA) and were expanded by Dodd-Frank, and also argued that the intention is to make things easier for small banks without the resources to handle the data reporting. An amendment made to the bill this week also required small banks that have gotten low scores on examinations performed by the government to provide the full scope of HMDA data.

But fair-lending groups, civil-rights organizations, and Democratic politicians have pointed out that many financial institutions would still be able to discriminate and hide their discriminationand the government, journalists, and housing activists would have fewer tools to detect troublesome patterns. That might make it harder for regulators to identify discriminatory lending practices that might precipitate another crisis going forward, or simply make the countrys yawning racial wealth gap worse.

Tim Kaine in the membrane
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Summarize that in one sentence
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Donald Trump will sign this with a gleeful smile
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Irony posted...

Summarize that in one sentence

A provision in the bill allows small banks to report less data to the government on who they lend to and at what rates, which would make it more difficult to see whether they are engaging in discriminatory practices.
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So it wouldn't just apply to black people
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"Just go to different banks to get loans"

typical
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It's unlikely to open the door to malicious intent on the part of the banks. However, it won't do much to help "problem" neighborhoods, and may in fact allow banks to easily avoid them as much as possible.

Irony posted...

Summarize that in one sentence

He can't because he didn't read it either. He's just link spamming from his Twitter feed again.
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The Admiral posted...

Irony posted...

Summarize that in one sentence

He can't because he didn't read it either.

I already did, 13 hours before your post.
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and there are people who CE who think systematic racism doesn't exist.

This is disgusting.
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My question is why do people think so little of black people to make them a victim in every scenario?
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fenderbender321 posted...

Well, anyone know? Will banks just say "let's just be racist for the hell of it" and start denying otherwise equally profitable loans to black people?

They have in the very recent past
http://wxxinews.org/post/five-star-bank-reaches-settlement-over-redlining-claims

New York's attorney general has reached agreement with Five Star Bank requiring it stop excluding predominantly minority neighborhoods in Rochester from mortgage lending.

Attorney General Eric Schneiderman says an investigation showed the New York-chartered bank left those neighborhoods out of its lending area, deemed loans there "undesirable" and excluded borrowers seeking mortgages of $75,000 or less, effectively making many of its loans unavailable there.

http://www.nytimes.com/2009/06/07/us/07baltimore.html

Wells Fargo, Ms. Jacobson said in an interview, saw the black community as fertile ground for subprime mortgages, as working-class blacks were hungry to be a part of the nations home-owning mania. Loan officers, she said, pushed customers who could have qualified for prime loans into subprime mortgages. Another loan officer stated in an affidavit filed last week that employees had referred to blacks as mud people and to subprime lending as ghetto loans.

We just went right after them, said Ms. Jacobson, who is white and said she was once the banks top-producing subprime loan officer nationally. Wells Fargo mortgage had an emerging-markets unit that specifically targeted black churches, because it figured church leaders had a lot of influence and could convince congregants to take out subprime loans.

Ms. Jacobsons account and that of the other loan officer who gave an affidavit, Tony Paschal, both of whom have left Wells Fargo, provide the first detailed accusations of deliberate racial steering into subprimes by one of the nations top banks.

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