July 31, 2020

Senators Warren, Brown, and Harris Call On CFPB To Protect Borrowers from Discrimination

Senators Say Companies' Use of Educational Data in Underwriting Raises Risk of Discrimination Against Communities of Color and Women Borrowers

Report (PDF)

Text of Letter (PDF)

Washington, DC -  United States Senators Elizabeth Warren (D-Mass.), a member of the Senate Banking Committee, Sherrod Brown (D-Ohio), and Kamala D. Harris (D-Calif.), today sent a letter to Consumer Financial Protection Bureau (CFPB) Director Kathy Kraninger, urging the agency to take immediate actions to address potential violations of the Equal Credit Opportunity Act (ECOA) by lenders who use educational data to make credit decisions.

"We renew our call for you to reverse your and Mr. Mulvaney's decision to strip the CFPB's Office of Fair Lending of its supervisory and enforcement duties. When Congress created the CFPB, we specifically charged the Director with creating an Office Of Fair Lending to 'provid(e) oversight and enforcement' of Federal fair lending laws and required this Office to submit an annual report to Congress detailing the CFPB's efforts to 'fulfill its fair lending mandate.' The findings of our review highlight how important it is that the CFPB have a dedicated office with the necessary resources and expertise to rooting out redlining and other forms of illegal discrimination," wrote the lawmakers.

In addition, the senators provided the CFPB with the results of their review of five lenders (Climb Credit, College Ave., Earnest, Social Finance Inc., and Upstart Network, Inc.) and one credit scoring company Measure One's use of educational data to make credit determinations. The senators' review identified certain uses of non-individualized educational data to assess credit that may discriminate against communities of color and women borrowers. The senators called on the CFPB to closely scrutinize these and other uses of educational data that may violate fair lending laws, as well as ensure that lenders have adequate systems in place to ensure they are complying with fair lending laws. The senators also called on the CFPB to cease issuing "No Action" letters relating to ECOA and make full use of its statutory authority to enforce fair lending laws.  

Previously, Senators Warren, Brown, and Harris joined their colleagues in pressing lenders for answers following a report from the nonprofit Student Borrower Protection Center that some lenders may be charging higher interest rates to students who graduated from Historically Black Colleges and Universities and Hispanic-Serving Institutions. 

A copy of the letter can be found here

A copy of the report can be found here, and an appendix of company responses here.