Lending Discrimination Against Minorities Still *Technically* Illegal, But Not Something Banks Have To Sweat

If you though Joseph Otting spent his entire two-and-a-half years as U.S. Comptroller of the Currency taking the “community” (read: uppity people of color who think they ought to have a say in things in their neighborhoods) out of the Community Reinvestment Act, think again: He also spent it making sure no bank would ever have to suffer the pain and embarrassment of public disclosure of racist lending practices, let alone a fine.

Since President Donald Trump took office, the OCC has quietly shelved at least six investigations of discrimination and redlining, according to internal agency documents and eight people familiar with the cases…. In each case, despite staff recommendations that fines or other penalties be imposed, the OCC took no public action and closed the investigations quietly….

The OCC has historically prioritized the well-being of banks over bank customers, said current and former examiners, but the balance has shifted even further under the Trump administration.

You see, Wells Fargo? Your mistake was relying on a single racist, rather than institutional racism and an abiding and experiential belief that total disregard for the rules inconvenient to you should not only go unpunished, but rewarded by Susan Collins. Also, getting caught in your own little redlining scandal five years before the advent of Trumpistan.

Anyway, since we’re naming names here today, let’s look at some examples of alleged racial bias in banking that Otting, in his long career therein and during his tenure as OCC, has never “personally observed.”

Flagstar Bank, a leading lender in Michigan, wrongly charged Black homeowners more through a network of mortgage lending affiliates, OCC officials concluded in 2017. That same year, agency examiners found that Colorado Federal Bank, an online lender, was doing the same to female borrowers.

Another inquiry by OCC officials concluded that Chicago-based MB Financial, a lender acquired by Fifth Third Bank last year, charged Latinos too much on mortgage loans. Cadence Bank, a lender in several Southern states, was turning away minority borrowers in Houston, according to an OCC investigation. Fulton Bank, a lender based in Pennsylvania, had been discriminating against minorities in parts of Richmond, Virginia, and its home state, regulators concluded.

Nor were the big guys totally innocent.

[Bank of America] was offering fewer loans to minority homebuyers in Philadelphia than to white people in a way that troubled examiners from the Office of the Comptroller of the Currency…. The examiners brought in OCC lawyers who were trained to tell when a bank’s lending practices could be deemed discriminatory, according to two people involved in the Bank of America matter…. Bank of America’s chief counsel’s office insisted that its own attorneys be in the room if OCC examiners wanted to keep talking to its employees. The OCC exam manual explicitly discourages such involvement…. Nevertheless, Morris Morgan, the OCC’s head of large bank supervision, who had previously been the regulator’s top examiner overseeing Bank of America, agreed to the bank’s request to have its lawyers sit in early on the probe.

It gets worse, though. Look at how ungrateful BoA is being about the whole thing.

Bank of America Corp. and Quicken Loans Inc. in recent days came out against the initiative, which would make it harder to pursue housing-discrimination cases by raising the burden of proof needed to bring a claim. Lenders were generally supportive of the changes when they were floated last year.

“Given the recent protests and events, and the recognition of where we are as a country, we would respectfully offer that the time is not right to issue a new rule,” Bank of America Vice Chairman Anne Finucane…. At issue is the so-called disparate-impact rule, which allows plaintiffs to use statistical analysis to demonstrate that lenders and housing providers promote policies that have a disproportionately adverse impact on minorities. As a result, plaintiffs can claim that banks, landlords or other firms violate fair-housing laws without necessarily proving they did so with an intent to discriminate.

Trump Financial Regulator Quietly Shelved Discrimination Probes Into Bank of America and Other Lenders [ProPublica]
Lenders Oppose Federal Effort to Weaken Housing-Discrimination Rule [WSJ]

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Lending Discrimination Against Minorities Still Technically Illegal, But Not Something Banks Have To Sweat