A recent lawsuit by industry trade groups, including the U.S. Chamber of Commerce, the American Bankers Association, and the Consumer Bankers Association, seeks to prevent the Consumer Financial Protection Bureau (CFPB) from using its unfair, deceptive, or abusive acts and practices (UDAAP) authority to combat discriminatory practices in banking and other financial services.
It is outrageous these trade associations could suggest that discrimination in any financial service is not unfair or abusive or that the CFPB should not be monitoring the financial industry for discrimination wherever it occurs.
Consumers of color have long faced discrimination and have less access or more expensive access to financial products and services than white Americans, and this discrimination exists beyond the credit markets covered by fair lending laws. People of color are more likely to be unbanked, to suffer unexplained disparities in credit scores and reports used for purposes beyond credit, and to experience discrimination in multiple areas throughout their financial lives. At the same time, more fintech financial products are entering the marketplace without clear consumer protections, making oversight for discrimination all the more important.
Strong monitoring and enforcement of all laws that can and do prevent discrimination, including fair lending and other consumer protection laws, are essential to give all consumers equal access to the financial marketplace and protection from predatory practices. Research clearly shows that barriers to accessing financial services create significant obstacles to building wealth for people of color. Laws that combat unfair, deceptive and abusive practices, and the CFPB’s power to examine companies for compliance with the law, are important tools in dismantling systemic obstacles to accessing credit, safe bank accounts, fair credit scores, and other financial services that enable wealth creation and social mobility.
Many banks and other companies represented by the organizations suing the CFPB have made public statements denouncing racism and announcing their commitment to eradicating discriminatory practices. We commend those values, but words are meaningless when, hidden behind their trade associations, companies are seeking to dismantle efforts to detect and combat discrimination. We call on banks and the members of the Chamber to be consistent in adhering to the values they espouse by insisting that their associations drop this lawsuit.
Discrimination in any form is simply wrong. We encourage oversight that discourages and penalizes discriminatory and unfair and abusive acts and practices throughout the financial industry.
Rich Dubois is executive director of the National Consumer Law Center.