March 13, 2018

Senator Warren Delivers Fifth Speech in Series Against Senate Bank Deregulation Bill

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Washington, DC - United States Senator Elizabeth Warren (D-Mass.) continued speaking out today against the Senate's efforts to enact the Bank Lobbyist Act.  In a speech delivered on the Senate floor, Senator Warren outlined how the legislation exempts 85 percent of banks from reporting data under the Home Mortgage Disclosure Act (HMDA), making it easier for banks to discriminate against women and people of color.

The full text of her remarks, as prepared for delivery, is available below.

Remarks by Senator Elizabeth Warren
*As prepared for delivery*
March 13, 2018

Mister President.  I've come to the floor of the Senate five times over the past week to talk about how the Bank Lobbyist Act puts American families in danger of getting punched in the gut in another financial crisis. I've talked about how it rolls back important consumer protections and how, if it passes, 25 of the 40 largest banks in the country - banks that sucked down almost $50 billion of bailout money during the crisis - could be regulated like community banks.

I also talked about how the bill will roll back the rules on the very biggest banks in the country -- JPMorgan Chase, Citigroup, and the rest - Banks that broke our economy in 2008, banks where no one went to jail, banks that taxpayers coughed up $180 billion to bail out.   And I talked about how Washington is poised to make the same mistake it has made many times before - deregulating giant banks while the economy is cruising, only to set the stage for another financial crisis.

Today, I want to talk about another part of the bill that keeps me awake at night - the part that guts our ability to find and go after mortgage discrimination by exempting 85 percent of banks from reporting data about the loans they make under a law called the Home Mortgage Disclosure Act or HMDA. 

There is a long and shameful history in this country of discriminating against communities of color when they try to buy homes.  From 1934-1968, the Federal Housing Administration led the charge, actively discriminating by refusing to insure loans for qualified borrowers in minority communities, while helping white families finance their plans to achieve the American dream. This policy wasn't a secret.  Nope.  It wasn't the product of a handful of racist government officials.  Nope.  It was the official policy of the United States government until 1968 - in my lifetime and in the lifetimes of the vast majority of other senators who serve today-the official policy of this government to help white people buy homes and to deny that help to black people. And because the federal government had set the standard, private lenders enthusiastically followed Washington's lead.

Homes are the way that millions of working families build some economic security.  They pay down a mortgage and own an asset that, over time, often appreciates.  A home serves as security to fund other ventures-to start a small business or send a youngster to college.  And if grandma and grandpa can hang on to the home and get it paid off, they pass along an asset that boosts the finances of the next generation and the one after that.

And that's exactly what white people have done for generations.  But not black people.  Systematically - over many decades-government policies that encouraged mortgage companies to lend only to white borrowers cut the legs out from under minority families trying to build some family wealth.  And the result has been predictable: it's contributed to a staggering gap of wealth between white communities and communities of color today. Here's one statistic from Massachusetts - according to the Boston Globe, the median net worth of white family in Boston is $247,500. For a black family it is $8. That's something all Americans-regardless of race-should be ashamed of. 

When I was traveling around the country in the aftermath of the financial crisis, it became clear to me that the crash had made the problem worse. Subprime lenders who peddled mortgages full of tricks and traps had specifically targeted minority borrowers.  That meant that during the Great Recession a huge number of minority borrowers lost their homes. And when rising home prices helped white Americans regain some financial security, communities of color, with their lower homeownership rates and their higher foreclosure rates, were left behind. Again, just one example:  according to Pew, between 2010 and 2013, the median wealth of white households grew by 2.4%, but the wealth of Hispanic households fell by 14.3% and the wealth of African American households fell by 33.7%.

Mortgage discrimination didn't end in the 1960s when formal redlining policies were abolished. It didn't end with the tightening of mortgage rules following the financial crisis. Lending discrimination is still rampant - in 2018. 

According to a new report that just came out from the Center for Investigative Reporting and Reveal, in 2015 and 2016, nearly two-thirds of mortgage lenders denied loans for people of color at higher rates than for white people. This problem affects both big lenders and small lenders. And it's nationwide - minority borrowers were more likely to be denied a mortgage than white borrowers with the same income in 61 different cities.

How do we know that?  Because of HMDA data.  That's how we can see how much black families were charged for a mortgage or how often Latino families were denied a chance to take out a mortgage-and we can compare those numbers with white borrowers who have the same incomes and credit scores.

But we can't do that if the data are missing. It's impossible to detect and fight mortgage discrimination without HMDA data.

The banking bill on the floor of the Senate says that 85 percent of banks will no longer be required to report HMDA data, including the borrower's credit score and age; the loan's points, fees, and interest rate; and the property value.  85%.  These data are essential to figuring out whether the borrower got a fair deal or not.

If this bill passes, there will be entire communities where there won't be enough data to figure out whether borrowers are getting ripped off.  Entire communities where it will be impossible to monitor whether people are getting cheated because of their race or their gender. Entire communities where federal and state regulators won't be able to bring cases and independent groups like Reveal won't be able to hold these groups accountable.

Sure banks will save a little money by not having to fill out the HMDA data, but when communities of color are once again left behind, there will be no way to prove it.

That's why civil rights groups around the country have spoken up against this bill. The Leadership Conference on Civil and Human Rights said, "exempting the overwhelming majority of our nation's banks and credit unions from an expanded HMDA requirement that would better enable federal regulators, state attorneys general, fair housing advocates, and others to identify and address discriminatory and predatory mortgage practices is unwise." The Urban League and the National Community Reinvestment Coalition wrote in a newspaper column that the bill "would be a giant step backwards for the public and national groups who use this data to ensure banks treat all borrowers equally." And according to the NAACP, the bill "would devastate our attempts to determine - and potentially rectify - racially discriminatory lending or loan approval patterns at play."

This is about basic fairness. HMDA data is an investment we should be making to make sure that all qualified Americans have the same chance to buy a home. Throughout our history, Washington has always fallen short of that goal. Gutting HMDA allows our country and our government to ignore discrimination, letting history repeat itself.

Communities of color will pay the price if this Congress make the same mistakes - again. It isn't too late.  We can stop this bill from becoming the law.