WASHINGTON—By a 48-43 vote, the GOP-run Senate rejected what supporters called a major civil rights bill. The majority, all Republicans, backed a new rule by the Trump-named boss of the agency regulating banks. That rule endorses what labor, Democrats and civil rights groups all called a return to racist redlining.
And if the senators hadn’t bounced the bill, HJRes 90, which would have overturned the pro-redlining rule, GOP White House occupant Donald Trump’s Office of Management and Budget would have recommended he do so. OMB uttered the veto threat after the Democratic-run House passed the bill.
Trump’s opposition to reining in redlining is par for the course with his prejudice against communities of color and with his kowtowing to corporate interests. Bankers and their allies supported junking the redlining ban and junking HJRes 90, which overturned the anti-redlining mandate.
And redlining, Sen, Sherrod Brown, D-Ohio, pointed out, was a key tool to segregate communities of color while taking their money to finance capitalist investments not in depositors’ neighborhoods.
The resolution, pushed by civil rights groups, the AFL-CIO, the Service Employees, the NAACP and others, would have overturned the comptroller’s rule that gutted enforcement of the 42-year-old Community Reinvestment Act. The CRA outlaws redlining by having federal bank regulators set standards for banks to serve under-served communities of color if they are to get or retain charters.
The CRA also orders the Comptroller of the Currency to make public results of its inspections of banks and whether they were redlining—denying mortgages and business loans—to communities of color. And it orders them to show where they were opening, or closing branches. Many communities of color are unbanked or underbanked.
The National Community Reinvestment Coalition made those points in its letter to lawmakers, co-signed by the AFL-CIO, SEIU and others. It also said the coronavirus pandemic exposed continuing redlining, and that the Trump comptroller’s rule would have only made a bad situation worse. Senators agreed.
“For decades, redlining and government bank sanctions–you know how they started,” said Sen. Sherrod Brown, D-Ohio, who would take over the chair of the Senate panel dealing with banking and housing issues if Democrats win Senate control.
“It was the Black codes after Reconstruction. Then it was Jim Crow. Then it was redlining. Now it is locking in discrimination by Trump nominees who have had another Trump appointee working to make it harder to invest.”
“For decades, redlining and government- and bank-sanctioned discrimination left parts of this country–often Black and Brown communities [and] often rural areas…with virtually no investment from banks. All kinds of people had dreams to start businesses, to build houses, to grow and support their communities, but they couldn’t get the loans to do it.”
“Banks were happy to take Black and Brown and low-income people’s deposits, and then they would lend their money to wealthy investors and companies outside of the community. Long after redlining and long after legal segregation officially ended, people living in largely Black and Brown neighborhoods weren’t able to get mortgages to buy a home because the bank just wasn’t making loans in those parts of town.”
“In the middle of a pandemic and economic crisis, the Senate voted to back the Trump administration’s effort to weaken CRA rules that require loans and investments in low- and moderate-income communities where banks take deposits,” said the National Community Reinvestment Coalition, which led the charge against the comptroller’s change and for HJRes 90. The AFL-CIO, SEIU and their allies signed NCRC’s letter.
“The changes will be particularly harmful for low-income and minority home buyers and homeowners, small businesses and local communities who need bank investments to recover equitably from COVID-19 and to revitalize their neighborhoods.
“The timing couldn’t have been worse. Why would you make it easier for banks to ignore the needs of the communities hit hardest by the pandemic? These communities need more access to credit and capital, not less. CRA has the potential to provide that capital. But not with the CRA rules the Office of the Comptroller of the Currency pushed through this year.”
Despite the pro-Trump senators’ vote to uphold redlining, the story may not be over. Two other federal agencies, notably the Federal Reserve, also regulate lenders and they sharply disagree with the comptroller’s pro-redlining rule. They’re working with NCRC and others to update, not undermine, the lending rules, the Fed’s chairman said several days before the Senate debate on Oct. 19.
And, anticipating what would happen, the NCRC sued the comptroller’s office in U.S. District Court in San Francisco in late June. It charged the comptroller with illegally operating in the dark and without proper notice of communications it had with the White House and lobbyists about its pro-redlining plan. The coalition also noted that once the Comptroller’s office published its proposal, it ignored overwhelming opposition among the 7,500 comments it got. The case has yet to be heard.
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