NFHA Urges the Senate Banking Committee to Thoroughly Vet Banking Nominees’ Records for a Demonstrated Commitment to Fair Lending and Racial Equity

FOR IMMEDIATE RELEASE

November 12, 2021

Contact: Izzy Woodruff | 202-898-1661 | IWoodruff@nationalfairhousing.org

NFHA Urges the Senate Banking Committee to Thoroughly Vet Banking Nominees’ Records for a Demonstrated Commitment to Fair Lending and Racial Equity

Washington, D.C. — The National Fair Housing Alliance (NFHA) has submitted a letter urging the Senate to carefully review the records of nominees to powerful positions at the Federal Reserve Board (“Board”) and the Office of the Comptroller of the Currency (“OCC”) to ensure they have a strong and demonstrated commitment to fair lending, fair housing, and racial equity.

The nomination process is particularly important given an extremely concerning report regarding the state of fair lending supervision and enforcement at the Board. In a stunning admission, the Board’s Office of Inspector General (“OIG”) recently released a report that disclosed that the Board has engaged in an appalling abdication of its responsibility to protect borrowers and communities of color. In sum, the report demonstrated that:

  • Despite years of intensive training, Board staff found that the Reserve Bank examiners’ analysis of potential redlining risk or violations by financial institutions “often required material changes or lacked support.” (Report at pages 25-26)
  • Without Board intervention, the Reserve Banks likely would have missed key redlining risk factors that could deny communities of color credit, financial stability, and life opportunities.
  • Despite these findings, in January 2021, the Board’s Division of Consumer and Community Affairs (“DCCA”) enacted a policy to delegate the review of high-risk redlining supervision matters to Reserve Bank examiners. (Report at p. 24)
  • The Board did not commit to taking meaningful additional steps to protect borrowers and communities of color, such as additional oversight, and would only commit to providing additional training to examiners some time in 2022. (Report at p. 27)
  • The Board’s OIG has agreed with this approach because, among other things, it will reduce delays in closing examinations and reduce the inconvenience for “[financial] institutions with an open review [that] are unable to engage in strategic corporate activities like mergers or acquisitions.” (Report at page 24) The OIG report does not discuss the policy’s impact on borrowers and communities of color.

For several years, NFHA has documented in its annual Trends Reports the precipitous decline in fair lending referrals made by federal financial regulators to the DOJ. In 2010, regulators referred 47 matters to the DOJ based on a belief that the lender had engaged in a pattern or practice of discrimination. By 2020, that number had plunged to just 12 matters.

 “The Board’s OIG report confirms the concerns we have had for some time that the federal financial regulators are not doing their part to promote racial equity or engaging in meaningful bank supervision and enforcing fair lending laws,” said Lisa Rice, President and CEO of NFHA. “Redlining, and the residential segregation it causes, represents one of America’s oldest and most harmful racist and discriminatory real estate policies. We are very disappointed that the Board’s actions seem to value bank convenience over the rights of borrowers of color. This is especially concerning at a time when the U.S. Department of Justice is marshalling its resources to undertake the much-needed ‘Combatting Redlining Initiative.’ The DOJ’s job will be so much harder without the cooperation of the Board or other prudential regulators in identifying redlining risk and violations and referring them to the DOJ as required by the Equal Credit Opportunity Act.”

In its letter to the Senate Banking Committee, NFHA provides a comprehensive list of questions for nominees presented by the White House to help ensure that, if confirmed, they will mobilize their agency’s resources to promote racial equity and protect the rights of borrowers of color and all others protected under the nation’s fair lending laws.

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The National Fair Housing Alliance (NFHA) is the country’s only national civil rights organization dedicated solely to eliminating all forms of housing and lending discrimination and ensuring equal opportunities for all people. As the trade association for over 200 fair housing and justice-centered organizations and individuals throughout the U.S. and its territories, NFHA works to dismantle longstanding barriers to equity and build diverse, inclusive, well-resourced communities.

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