Bush Judge Imposes National Freeze on Rule Preventing Small Biz Lending Discrimination, A Win for Banks With Discrimination History

WASHINGTON, DC — In a blow to American entrepreneurs from traditionally underserved communities looking to start a small business, a George W. Bush-appointed federal judge has imposed a nationwide injunction against the Consumer Financial Protection Bureau (CFPB)’s rule requiring lenders to collect demographic data from small-business borrowers, similar to the home mortgage process. Fully implemented, the CFPB rule would help expose acts of discrimination and increase access to credit for traditionally underserved small businesses like those owned by women, people of color, and LGBTQ entrepreneurs. The judge’s ruling expanded a previous order in favor of the plaintiffs suing the CFPB, including the 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. As government watchdog Accountable.US has documented, numerous companies, executives and industry special interests linked to the lawsuits 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.’”