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.’”
This ruling is an insult to traditionally underserved small business borrowers that face lending discrimination every day. It’s no coincidence that the big banks suing to keep demographic lending data under lock and key include many of the same banks who’ve been caught in acts of discrimination. More concerning, Senate conservatives that have taken millions of dollars from the financial industry recently voted in favor of the big bank’s cause, arguing discrimination is just a normal part of doing business. The vote was a stark reminder why everyday Americans need a strong and independent CFPB free from political and industry influence in Congress.
“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 scams, discrimination 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.”