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The Senate will have a procedural vote on the "Bank Lobbyist Act," a rollback of some Dodd-Frank Wall Street reforms, Monday afternoon. This is the second cloture vote on the bill, this one on a manager's amendment that purports to improve the version the Senate moved ahead on last week. But the bill is still not anything Democrats should be supporting. Not just because it would allow for loosened Federal Reserve oversight on 25 of the top 38 banks in America, making it likelier (says the Congressional Budget Office) that the government would have to bail out big banks again.
It's also bad because it's racist. Not only is financial deregulation in general racist policy, as Ryan Cooper details this legislation makes racial discrimination in lending easier.
The first is relatively passive: Deregulation raises the risk of a general economic crash, which harms African-Americans disproportionately due to their being clustered on the bottom of the income ladder. Since blacks tend be poorer than whites and are often the last hired and first fired, they get the worst of it when a recession hits.
But the second reason is actively racist: Banks have long tended to directly prey on black people, whether it was abusive contract selling decades ago or shoving middle-class black families who qualified for normal home mortgages into subprime loans during the housing bubble. (Or as Wells Fargo employees called it, tricking "mud people" into "ghetto loans.")
The ensuing foreclosure crisis—carried out by banks and mortgage servicers, and powerfully enabled by centrist liberal and then-Treasury Secretary Tim Geithner—was one of the great epochs of black wealth destruction in U.S. history. From 2007-2016, average black home wealth declined by 28 percent, while the average home wealth of whites fell by only 16 percent. (Over that same period, the mostly-white top 1 percent, whose wealth is mostly in stocks, increased its wealth by $4.9 million on average.) To this day, blacks and Latinos have far greater trouble getting home loans than whites.
One of the things Dodd-Frank did was require lenders to collect and report information on lending to people of color, including information on the terms and conditions of loans. That would allow regulators to see and combat predatory and discriminatory lending practices. This bill repeals many of those Dodd-Frank reporting requirements, and would exempt lenders making 500 or fewer mortgages a year from having to report more extensive data beyond borrowers' race, ethnicity and zip code—the basics required under the 1975 Home Mortgage Disclosure Act. So it's just small banks and credit unions, right, when you're only talking about 500 mortgages a year? It's actually 85 percent of banks and credit unions making mortgage loans.
The Democrats who are supporting this bill are mostly those up for re-election this year in red or purple, and have said that they want to get it passed so they can show voters they're doing something and working with Republicans. They can still do that—they can still work for a banking bill that really helps small community banks and credit unions. But they need to focus the bill so that it's tailored to really help those small institutions and to not be racist. Because Democrats should not be supporting racist legislation. They're Democrats.
The bill could come up for a final vote as soon as Wednesday. Democrats need to hear the message from all of us that they need to fix this bill before it passes.