WASHINGTON–The Justice Department, the Office of the Comptroller of the Currency (OCC) and the CFPB have announced a significant effort to tackle redlining in financial services.
A spokesperson for NAFCU told CUToday.info the trade group does not anticipate the new national effort will trickle down to credit unions, but that it will still be watching the feds’ increased focus.
Late last week the Justice Department announced the launch of its new Combatting Redlining Initiative as it examines lenders that avoid providing services to individuals living in communities of color because of the race or national origin of the people who live in those communities. The new initiative represents the department’s most aggressive and coordinated enforcement effort to address redlining, which is prohibited by the Fair Housing Act and the Equal Credit Opportunity Act, according to the Justice Dept.
“Lending discrimination runs counter to fundamental promises of our economic system,” said Attorney General Merrick B. Garland. “When people are denied credit simply because of their race or national origin, their ability to share in our nation’s prosperity is all but eliminated. Today, we are committing ourselves to addressing modern-day redlining by making far more robust use of our fair lending authorities. We will spare no resource to ensure that federal fair lending laws are vigorously enforced and that financial institutions provide equal opportunity for every American to obtain credit.”
In announcing the initiative, the Justice Department added the gap in homeownership rates between white and Black families is larger today than it was in 1960, before the passage of the Fair Housing Act of 1968.
This Initiative will be led by the Civil Rights Division’s Housing and Civil Enforcement Section in partnership with U.S. Attorney’s Offices.
Goal of Initiative
According to Justice, the initiative will:
- Utilize U.S. Attorneys’ Offices as force multipliers to ensure that fair lending enforcement is informed by local expertise on housing markets and the credit needs of local communities of color.
- Expand the department’s analyses of potential redlining to both depository and non-depository institutions. Non-depository lenders are not traditional banks and do not provide typical banking services, but engage in mortgage lending and now make the majority of mortgages in this country.
- Strengthen our partnership with financial regulatory agencies to ensure the identification and referrals of fair lending violations to the Department of Justice.
- Increase coordination with state attorneys general on potential fair lending violations.
NAFCU Response
In response, NAFCU VP-Legislative Affairs Brad Thaler said he does not expect the initiative will focus in any way on credit unions.
“Credit unions don’t redline. Credit unions serve their fields of membership,” said Thaler. There is no track record of credit unions redlining in the way there has been with banks. As cooperative financial institutions, obviously, we are always leery of new burdens being put on credit unions. We’d be leery of efforts to extend CRA or CRA-like requirements to credit unions, which is something we have long opposed. Credit unions have a good track record of serving members and trying to serve the underserved.”