WASHINGTON—United States Senator Bill Hagerty (R-TN), a member of the Senate Banking Committee, joined Senator J.D. Vance (R-OH), along with all other Republican members of the Senate Banking Committee, in sending a letter to U.S. Attorney General Merrick Garland and Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra urging them to reconsider their October 12 joint statement on lending discrimination against “noncitizen borrowers.”
Through the statement, which dramatically upends decades of guidance from the CFPB and the Federal Reserve, the Department of Justice (DOJ) and CFPB aim to force American financial institutions to extend loans to illegal immigrants. This practice contradicts longstanding legal interpretations from federal regulators and could create situations where lenders are unable to recoup loan payments from deported illegal aliens.
“We write today to express our concerns regarding the October 12, 2023 joint statement by the Consumer Financial Protection Bureau (‘CFPB’) and the Department of Justice (‘DOJ’) warning financial institutions that the consideration of immigration status in loan applications may be a violation of the Equal Credit Opportunity Act (‘ECOA’),” the Senators wrote.
“The importance of considering immigration status when assessing the potential of repayment is nothing short of common sense,” the Senators continued. “Even the CFPB notes that an ‘applicant’s immigration status . . . could have a bearing on a creditor’s ability to obtain repayment.’ And if financial institutions cannot use immigration status in their assessment of risk, the potential of a widespread market event where a significant number of loans go into default is all the more likely. In that event, the strain placed on financial institutions may pose a contagion effect and cause broader economic repercussions impacting the financial stability of the American economy.”
“As members of the Senate Committee on Banking, Housing, and Urban Affairs, we urge you to retract your agencies’ irresponsible joint statement and instead endorse risk-based lending practices that promote safety and soundness in the bank sector,” the Senators concluded.
A copy of the letter can be found here.