Washington D.C. – In a blow to entrepreneurs from Texas communities of color looking to start a small business, a Bush-appointed federal judge blocked the Consumer Financial Protection Bureau from enforcing a new rule requiring lenders to collect demographic data from small-business borrowers. Increased transparency under the CFPB rule helps ensure small business borrowers and others are treated fairly. Plaintiffs in the anti-CFPB lawsuit include Texas Bankers Association and American Bankers Association, which teamed up on another lawsuit in Texas last year seeking to reverse the CFPB’s crackdown on illegal discrimination in the financial industry – while raising dubious arguments about the CFPB’s structure and authority. As government watchdog Accountable.US has documented, numerous companies, executives and industry special interests linked to the lawsuit challenging the CFPB’s authority have troubling histories of discrimination or an ax to grind against the Bureau for successfully protecting consumers from abuse and mistreatment.
For example, JPMorgan Chase, represented on the board of the American Bankers Association, settled with the U.S. Justice Department for $55 million in 2017 over allegations the bank allowed mortgage brokers to discriminate against minority borrowers. And Washington Federal Bank (WaFD), whose President and CEO is on the American Bankers Association (ABA) board of directors, has faced two separate CFPB penalties totaling $234,000 for massive mortgage data errors the Bureau said could hinder efforts to fight discrimination. Former CFPB Director Richard Cordray said WaFD’s flawed data “‘ma[de] it more difficult for the CFPB to discover and stop discriminatory lending.’”
Anyone paying attention knows this latest legal assault against the CFPB has nothing to do with upholding the constitution and everything to do with keeping the agency from protecting borrowers from industry discrimination and abuse,” said Liz Zelnick, Director of Accountable.US’ Economic Security & Corporate Power.
“Big bank special interests with a record of discrimination have delivered a one-two punch against the Bureau in their own selfish interest to turn away borrowers of color with impunity. First they sued the CFPB arguing it’s ‘fair’ for the financial industry to discriminate and now they want to stop the agency from uncovering acts of discrimination by keeping lending data under lock and key. The bankers’ case that discrimination is just a normal part of doing business only makes a stronger case for why everyday Americans need the Bureau to stay strong, independent and free from political influence in Congress,” continued Zelnick.
“These lawsuits are part of a long-running, organized effort by greedy industries and politicians in their pocket to defang, defund or do away with the CFPB because it works so well to protect consumers from schemes, scams and predatory behavior,” added Zelnick. “If the financial industry is allowed to slam the door on Americans seeking financial services on the basis of identity without consequence, it will keep many families from getting ahead. If the special interests successfully cripple the CFPB’s ability to protect all consumers, it will make it that much harder to grow the middle class.”