Justice for All: Achieving Racial Equity Through Fair Access to Housing and Fina... (EventID=111293)

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Connect with the House Financial Services Committee Get the latest news: https://financialservices.house.gov/ Follow us on Facebook: https://www.facebook.com/HouseFinancialCmte Follow us on Twitter: https://twitter.com/FSCDems ___________________________________ On Wednesday, March 10, 2021, from 10:00 a.m. (ET) Full Committee Chairwoman Waters and Ranking Member McHenry will host a virtual hearing entitled, “Justice for All: Achieving Racial Equity Through Fair Access to Housing and Financial Services." ___________________________________ Witnesses for this one-panel hearing will be: • Paulina Gonzalez-Brito, Executive Director, California Reinvestment Coalition • Rashad Robinson, President, Color of Change • Dr. Keeanga-Yamahtta Taylor, Assistant Professor of African-American Studies, Princeton University • John C. Yang, President and Executive Director, Asian Americans Advancing Justice | AAJC • Ian Rowe, President and Co-Founder of Vertex Partnership Academies ___________________________________ Overview Systemic racism in America has led to the exclusion of people and communities of color in the housing and financial services industries, as well as the consumer financial marketplace. Current calls for racial justice have been prompted by historical and recent incidents, including police brutality against Blacks and other people of color and an uptick in violence against Asian Americans falsely blamed for the COVID-19 pandemic. These calls have also increased focus on the link between racial and economic disparities. Barriers and biases erected against people of color, the businesses they own, and the communities they live in have been exacerbated by the COVID-19 pandemic, including challenges in accessing capital and banking services (including the Paycheck Protection Program), homeownership (with people of color more likely to be delinquent on their mortgages), and leadership opportunities at the highest levels in corporate America and financial services firms. This hearing will focus on solutions that remove those barriers and replace them with real opportunities that create equity for people and communities of color in the financial services industry and beyond. Access to Capital, Credit and Financial Services Borrowers of color have faced numerous challenges accessing credit from financial institutions to buy a home, buy a car, go to college, or start a small business. In the 1970s, Congress enacted civil rights statutes like the Equal Credit Opportunity Act (ECOA) and the Community Reinvestment Act (CRA) to ensure borrowers had equal access to credit, and to combat discriminatory practices, such as redlining in which banks discriminate against prospective customers based primarily on where they live, or their racial or ethnic background, rather than creditworthiness. Despite these laws, discriminatory practices persist. For example, the Center for Investigative Reporting conducted an investigation of 31 million records that were reported and made publicly available in compliance with the Home Mortgage Disclosure Act (HMDA) to identify lending disparities.1 The investigators found that more than 60 metro areas continue to exhibit patterns of modern day redlining, despite the fact that 98 percent of banks pass their exams by receiving a satisfactory or outstanding grade under CRA, a law intended to combat redlining. Center for Investigative Reporting’s data showed Black applicants were turned away at significantly higher rates than whites in 48 cities, Latinos in 25, Asians in nine and Native Americans in three. Other studies have found discriminatory practices in payday lending,2 consumer credit reporting, and debt collection. Despite these trends, Trump appointees took several regulatory actions to roll back the implementation of CRA, diminished fair housing and lending enforcement, and weakened consumer protections. New financial technologies such as artificial intelligence, as well as the emerging prominence of fintech companies, may provide opportunities to reduce the racial wealth gap, but may also create new ways to mask bias or further entrench discrimination in lending.6 A May 2019 Brookings report concluded that machine learning algorithms can oftentimes recreate or erroneously legitimize real-world prejudices and biases, and that the fairness of algorithms are predicated on the quality of the data it was trained on. While nonbank fintechs may offer products and services to traditionally underbanked communities of color, these fintechs may present enhanced risks with regard to consumer protections because they may not be required to adhere to CRA and other regulatory requirements that federally regulated banks must follow. During the COVID-19 pandemic, minority-owned businesses have faced challenges accessing relief programs, like the Paycheck Protection Program (PPP). One... Hearing page: https://financialservices.house.gov/calendar/eventsingle.aspx?EventID=406264