Coalition of Consumer Advocates Tells Court: Persistent Discrimination in Financial Services Industry is Unfair, Bad for Economy

December 23, 2022 — Press Release

TEXAS – Today, a coalition representing a broad cross-section of consumers, including communities of color and communities with lower incomes, urged a federal court to uphold the Consumer Financial Protection Bureau’s (CFPB) authority to hold financial institutions accountable for discriminatory practices. This brief, filed by Democracy Forward on behalf of the California Reinvestment Coalition (CRC), National Community Reinvestment Coalition (NCRC),  National Association for Latino Community Asset Builders (NALCAB), Center for Responsible Lending (CRL), Texas Appleseed, and the National Consumer Law Center (NCLC), urges the U.S. District Court in the Eastern District of Texas to reject the arguments advanced by the U.S. Chamber of Commerce, the American Bankers Association, the Consumer Bankers Association, and four trade groups from Texas as they seek to gut the CFPB’s authority to protect consumers from discriminatory practices.

Chamber v. CFPB is the latest salvo against the CFPB’s authority to protect consumers, which has been the target of right-wing legal challenges. Fourteen right-wing state Attorneys General – from Alabama, Arizona, Arkansas, Georgia, Idaho, Indiana, Louisiana, Mississippi, Oklahoma, South Carolina, Tennessee, Texas, Utah, and West Virginia – are on record in this case seeking to eliminate the agency’s authority to protect consumers from discrimination across all financial services.

Financial institutions have a long history of discriminatory practices that have resulted in many populations, including people of color, having inadequate access to financial services. The coalition’s brief details how persistent discrimination in the financial services industry poses significant barriers to full and equitable participation in the economy by people of color, women, and other marginalized groups. For example, people of color are discriminated against in attempts to open bank accounts and cash checks, families of color receive predatory loans at higher rates than white borrowers, and discrimination prevents businesses owned by people of color and women from accessing credit. Discrimination in financial services has hurt the economy to the tune of $16 trillion since 2000. The brief also explains that discrimination clearly may meet the definition of an “unfair” practice as laid out in the Dodd–Frank Wall Street Reform and Consumer Protection Act.

“Discrimination is unfair, and it doesn’t take a law degree to recognize that,” said Rachel Fried, Senior Counsel at Democracy Forward. “As the consumer advocates’ brief makes clear, the CFPB was right to clarify that discriminatory practices can fall within Congress’ definition of an unfair practice. But beyond the law, we know that discrimination is immoral; it hurts consumers, communities, and the economy. Rather than working to allow discrimination, those challenging the CFPB’s authority to protect consumers should be relegating unfair and harmful discriminatory practices to the dustbin of history where they belong.”

“Discrimination is an invidious and unfair practice,” said CRC CEO Paulina-Gonzalez Brito. “The work of the CFPB is essential to the well-being of consumers and communities in California. It has the authority to determine unfair and harmful practices. The ABA and the Chamber have shown their true colors in challenging CFPB efforts to prevent discrimination and arguing that the CFPB is unconstitutional.”

“The biggest corporate interests in our economy are telling the courts that they have a right to discriminate. It’s absurd, ugly and dangerous,” said NCRC President and CEO Jesse Van Tol. “Community groups who work every day to vindicate the rights of the underserved will not stand by while affluent big-business lobbyists attempt to tear down the CFPB.”

“The CFPB’s authority to protect consumers should not be undermined. Racial and ethnic discrimination stalls the economic advancement of underinvested communities and the financial institutions that are intended to serve all must be held accountable for unjust discriminatory practices that have plagued the system since its inception,” said Marla Bilonick, President & CEO of NALCAB. “NALCAB proudly stands with other consumer advocates against abusive practices that disproportionately impact Latinos and communities of color.”

“It is outrageous that the Chamber, the American Bankers Association, and other trade associations could even suggest that discrimination in financial services is not unfair and abusive,” said Rich Dubois, executive director of NCLC. “The CFPB should be monitoring the financial industry for discrimination wherever it occurs, not just in lending.”  

The groups submitting today’s brief are leading advocates in the banking and business sectors for communities of color and communities with lower incomes. They are also at the forefront of research on discrimination within the credit and banking industries.

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