by Charlene Crowell, Special to The Informer<\/p>\n\n\n\n
On Sept. 28, two of the nation\u2019s largest and most influential business groups filed a lawsuit<\/a> against the Consumer Financial Protection Bureau (CFPB) and its director, Rohit Chopra. The action aims to prevent the CFPB from using its existing authority to protect consumers from racial discrimination when seeking mortgages, auto loans, credit cards, bank accounts<\/a> or other financial services<\/a>.<\/p>\n\n\n\n Leading the lawsuit are the U.S. Chamber of Commerce, a lobby group for more than three million businesses across the country, and the American Bankers Association<\/a>\u2019s more than 4,000 banks and trust companies. Additional co-plaintiffs include the Consumer Bankers Association, Texas Association of Business, and the Independent Bankers Association of Texas. <\/p>\n\n\n\n The lawsuit argues that when the CFPB conducts its regular exams of big banks and other financial institutions, it does not have the authority to look for discrimination \u2013 based on race, religion<\/a> and other personal characteristics \u2013 that is illegal under the prohibition on unfair, deceptive and abusive practices. <\/p>\n\n\n\n \u201cThe CFPB is pursuing an ideological agenda that goes well beyond what is authorized by law and the Chamber will not hesitate to hold them accountable,\u201d U.S. Chamber Executive Vice President and Chief Policy Officer Neil Bradley said<\/a> in a statement. <\/p>\n\n\n\n But federal laws \u2013 not ideology \u2013 are the framework for the CFPB\u2019s anti-discrimination work. <\/p>\n\n\n\n Discrimination in housing and lending more broadly were outlawed by 1968\u2019s Fair Housing Act and 1974\u2019s Equal Credit Opportunity Act (ECOA). Enforcing these laws is essential for financial fairness. <\/p>\n\n\n\n At the same time, illegal financial discrimination is pervasive, and some exists beyond the parameters of these fair lending laws that have traditionally been the focus of regulators. For example, the Student Borrower Protection Center has pointed to<\/a> debt collection, predatory for-profit colleges, reporting credit information, and financial advice scams as markets where discriminatory acts or practices may not be covered by laws focused on the extension of credit but constitute unlawful financial discrimination nonetheless. <\/p>\n\n\n\n \u201cWhen a person is denied access to a bank account because of their religion or race, this is unambiguously unfair,\u201d Chopra said in a statement<\/a> announcing the bureau would start looking for unlawful non-credit financial discrimination. <\/p>\n\n\n\n In a blog post<\/a>, CFPB officials in charge of supervision and enforcement wrote, \u201c[w]hen people of color suffer racist conduct in the financial marketplace, it can cause substantial monetary and non-monetary harms.\u201d <\/p>\n\n\n\n Consumer groups had strong reactions to the business groups\u2019 lawsuit, saying it ignored the impetus for creating a federal financial watchdog: to ensure that financial services firms no longer prey upon unsuspecting consumers \u2013 particularly Black and Latino consumers who often were targeted for financial exploitation. <\/p>\n\n\n\n \u201cIt is outrageous these trade associations could suggest that discrimination in any financial service is not unfair or abusive or that the CFPB should not be monitoring the financial industry for discrimination wherever it occurs,\u201d said<\/a> Rich Dubois, executive director of the National Consumer Law Center. \u201cPeople of color are more likely to be unbanked, to suffer unexplained disparities in credit scores and reports used for purposes beyond credit, and to experience discrimination in multiple areas throughout their financial lives.\u201d <\/p>\n\n\n\n Elyse Hicks, consumer policy counsel at Americans for Financial Reform, a broad-based advocacy coalition that includes civil rights and racial justice advocates, also spoke out. <\/p>\n\n\n\n \u201cWith this lawsuit, the bank lobby has joined the disgraceful campaign of many groups and politicians that exploit racial grievance to stop the United States from facing up to the very real effects of persistent discrimination,\u201d Hicks said<\/a> in a statement. \u201cThe goal of big banks is simply to avoid having to face up to their own role in the historic wrong of structural racism, and the costs of that to their own bottom lines.<\/p>\n\n\n\n \u201cThe CFPB has clear authority, as the top consumer watchdog, to watch out for discrimination of all kinds in consumer finance, penalize offenders, and correct bank practices,\u201d Hicks concluded. <\/strong><\/p>\n\n\n\n A multi-agency initiative begun nearly a year ago that included CFPB and the Department of Justice took a similar approach in response to discrimination in financial services. <\/p>\n\n\n\n