The landmark Fair Housing Act will be 50 years old this year. Two full generations have grown up in the United States in this time, educated in schools teaching over a century of civil rights struggles and efforts to stop discrimination, whether by race, color, religion, sex or other prohibited basis.
The Wall Street Reform Act (aka Dodd Frank), passed by Congress in 2010 and signed into law by President Barack Obama, created the Consumer Financial Protection Bureau (CFPB) and gave it powers to police lending discrimination in the federal arena.
The CFPB opened its doors in 2011. Lawmakers created the federal agency to hold banks and lenders to standards of basic fairness in their treatment of consumers — a job that none of the old bank regulators had considered worthy of their attention. Over the next six years, it crafted new rules against unaffordable, booby-trapped mortgages; went to bat for borrowers and families against loan sharks and other financial scammers; established a complaint system that helped tens of thousands of consumers get problems resolved; and delivered, in all, roughly $12 billion in financial relief to about 29 million wronged consumers.
The passage of Wall Street Reform signaled a continuation of the federal government’s commitment to equality and fairness in lending, begun so many years ago. Banking institutions were burdened with self-regulation of their lending activities and, to be sure, the burdens carried associated costs.
But the public attacks by banks and their lobbyists on Wall Street Reform and the Consumer Bureau have been relentless. Today, important consumer protections teeter on the brink of repeal. The CFPB, under Trump-appointed Mike Mulvaney, has pulled back from enforcing laws against racially discriminatory lending; slammed the brakes on steps to hold Equifax accountable for the massive data breach last year that affected 143 million Americans; dropped a lawsuit against abusive online payday lenders; and abandoned an investigation of another.
For many, if not most bankers, prohibited discrimination simply does not exist. Many feel it does not exist. Yet, for reasons difficult to comprehend, the issue of discrimination in lending just will not go away.
And then a manager at a Starbucks in Philadelphia summons police to remove two black patrons who are simply waiting at a table for a friend to arrive. A company that trumpeted in its founding years that it would lead the way in race relations among American corporate businesses finds itself hoisted into a national media fury over a seemingly innocent social setting. For one day, all of Starbucks will close for business to instruct all employees on corporate culture.
So too with Wells Fargo on April 20 this year. It was the Consumer Bureau that led the federal investigation. With the $1 BILLION sword of Damocles over its head, Wells Fargo shouted its commitment to their customers to deliver only the best service. The bank had forced its customers into unneeded car insurance and charging mortgage borrowers unfair fees.
I cannot predict the future of the Consumer Bureau but I can predict the future of lending discrimination will encompass prohibited discrimination and will be with us for some time to come. Deny its existence if you will, but it is alive and well in the payday lending industry, the new and used car sales industry, the mortgage lending industry and in access to equal credit.
I continue to wonder in awe at the unwillingness of banks to pay a little for self-policing today that solves an “imaginary” problem. Rather, the preferred route seems to be to face the enormous cost of conduct rooted in the human condition that will inevitably surface in customer relations.
Rashmi Rangan is the executive director of the Delaware Community Reinvestment Action Council.