Bank deregulation denies black homebuyers shot at parity
Over the past few weeks, I went to the floor of the Senate six times to talk about how the recently passed Bank Lobbyist Act puts American families in danger of another financial crisis. It rolls back important consumer protections and changes the rules so that 25 of the 40 largest banks in the country — banks that sucked down almost $50 billion of bailout money during the crisis — could be regulated like community banks.
It would also roll back the rules on the very biggest banks in the country, like JPMorgan Chase and Citigroup. These banks broke our economy in 2008 and no one went to jail. Taxpayers coughed up $180 billion to bail them out. Washington is poised to make the same mistake it has made many times before: deregulating giant banks while the economy is cruising, only to set the stage for another financial crisis.
But there’s another part of the bill that keeps me awake at night — the part that guts our ability to find and go after mortgage discrimination by exempting 85 percent of banks from reporting certain data about the loans they make under a law called the Home Mortgage Disclosure Act or HMDA.
There’s a long and shameful history in this country of discriminating against minority borrowers when they try to buy homes. From 1934-1968, it was the official policy of a government agency, the Federal Housing Administration, to refuse to insure loans for qualified borrowers in minority communities — to help white people buy homes and to deny that help to black people. The federal government had set the standard and private lenders enthusiastically followed Washington’s lead.
Homes are the way that millions of working families build economic security. They pay down a mortgage and own an asset that, over time, often appreciates. A home serves as security to fund other ventures, like starting a small business. And if grandma and grandpa can hang on to the home and get it paid off, they pass along an asset that boosts the finances of the next generation and the one after that.
That’s what white people have done for generations.
Over many decades, these policies cut the legs out from under minority families trying to build some wealth. This has contributed to a staggering gap of wealth between white communities and communities of color today. According to the Boston Globe, the median net worth of white family in Boston is $247,500. For a black family it is $8. That’s something all Americans, regardless of race, should be ashamed of.
The 2008 financial crisis made the problem worse. For years, subprime lenders targeted communities of color with scam mortgages, which meant minority families were more likely to lose their homes in the crash than white families. When home rising home prices helped white homeowners recover, minority families were left behind.
And, lending discrimination is still rampant in 2018. According to the Center for Investigative Reporting and Reveal, in 2015 and 2016, nearly two-thirds of mortgage lenders denied loans for people of color at higher rates than for white people. How do we know that? Because of HMDA data. That’s how we can see how much black and Latino families were charged for or denied a chance to take out a mortgage and compare those numbers with white borrowers who have the same incomes and credit scores.
We can’t do that if the data are missing. It’s impossible to detect and fight mortgage discrimination without HMDA data.
The banking bill that just passed states that 85 percent of banks will no longer be required to report certain HMDA data, including the borrower’s credit score and age; the loan’s points, fees, and interest rate; and the property value. There will be entire communities where there won’t be enough data to figure out whether borrowers are getting ripped off because of their race or their gender. Federal and state regulators won’t be able to bring data-backed cases to hold these groups accountable.
That’s why civil rights groups around the country, like the Leadership Conference on Civil and Human Rights, the Urban League and the National Community Reinvestment Coalition, and the NAACP, spoke up against this bill. So did I. Last week, the Senate passed a bill that one again left communities of color behind. We lost this battle, but I’m not going to give up. I’ll keep fighting mortgage discrimination to make sure that every family has a fair shot at the American dream of home ownership.
Elected in 2012, Elizabeth Warren serves as U.S. senator from Massachusetts.