Democrats Back a Bank Bill That Could Hurt Black Homebuyers

Jamelle Bouie, Slate, March 14, 2018

When 67 senators voted on Wednesday night to weaken the Dodd-Frank Act and ease rules across the banking industry, they also made it easier for banks to discriminate against black borrowers.

A provision in the Economic Growth, Regulatory Relief, and Consumer Protection Act would exempt the large majority of mortgage lenders from key disclosure requirements that help the government identify racial discrimination and enforce fair housing laws. The provision would facilitate redlining, allowing lenders to deny loans to black homebuyers, while also giving lenders carte blanche to overcharge black homebuyers or steer them into the same predatory loans that exploded during the financial crisis, pushing countless families into foreclosure.

Yet this bill, which would widen the already staggering racial wealth gap, won support from more than a dozen Democratic senators, including members such as Tim Kaine, Mark Warner, Claire McCaskill, and Doug Jones who rely on black and Hispanic voters to win elections. (The bill is also backed by one independent, Angus King of Maine, who caucuses with Democrats.)

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{snip} Despite the Fair Housing Act and other measures meant to break residential segregation, most black Americans remain cloistered in black neighborhoods with elevated rates of poverty, joblessness, and crime, as banks continued to discriminate against black customers in a less visible but still potent form of redlining. This kind of segregation does more than concentrate and intensify disadvantage—it creates captive markets, as consumers live at the mercy of a handful of providers. This is especially true for lending. {snip}

With the rise of subprime lending in the 1990s, discrimination in real estate lending moved from traditional redlining—where blacks (and Hispanics) were denied loans outright—to predatory lending practices, where banks targeted black homebuyers with the most dangerous loans, saddling a large crop of underserved consumers with burdensome terms and undue risk. {snip}

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The combination of predatory subprime lending and the financial crisis had a similar effect, wiping out decades of growth and setting black families back a generation. A 2015 report commissioned by the ACLU found that, as a result of the recession, home equity for black Americans dropped by 12 percent, compared to 9 percent for whites, and projected black household wealth will continue to be substantially lower compared to their white counterparts.

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The acting director of the CFPB [Consumer Finance Protectoin Bureau], White House budget chief Mick Mulvaney, has stripped enforcement powers from the unit responsible for pursuing discrimination cases. But banks are still collecting the data, which is valuable in itself. The new banking bill would change that, obscuring the activities of smaller lenders and—if history is a guide—facilitating the practices that disadvantage black and Hispanic homebuyers and maintain vast disparities in wealth and opportunity.

The Senate Democrats who back this bill say they need a bipartisan accomplishment ahead of a difficult campaign season to show voters that they can “break through the partisan gridlock that has plagued Washington for too long.”

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Racism is more than just bigotry and hate. It’s a structural force that shapes our economy as much as it influences our politics. It assigns differential value to human life and labor, marking particular groups as subordinate castes and opening them up to exploitation and expropriation. Housing discrimination and redlining are a case study in how race and capital accumulation operate together, with dispossession happening along racial lines.

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