Bill aims to prohibit discrimination in financial services for 1st time

The bill bridges gaps that left financial services out of the Civil Rights Act.

October 22, 2020, 12:52 PM

A new bill proposed by a handful of Senate Democrats aims to make discrimination in the banking industry explicitly illegal for the first time, bridging a gap that left the financial services industry out of 1964 Civil Rights Act discrimination laws.

Senators Sherrod Brown (D-OH), Tina Smith (D-MN), Cory Booker (D-NJ), Bob Menendez (D-NJ), Elizabeth Warren (D-MA), and Chris Van Hollen (D-MD) introduced the Fair Access to Financial Services Act to fellow lawmakers on Wednesday.

The bill would prohibit banks from discriminating based on race, color, religion, national origin, sex, gender identity or sexual orientation.

The landmark Civil Rights Act of 1964 outlawed discrimination in many public places and businesses including hotels, restaurants, movie theaters and more -- but it notably left out banking institutions. The new bill, if passed into law, would allow a way for courts to hold banks accountable for discriminatory practices.

"Too many Black and brown Americans experience racial profiling and unequal treatment when trying to access services at banks and other financial institutions. Victims of discrimination are not even able to hold financial institutions accountable-it is shameful," Sen. Brown said in a statement.

"It is past time we pass legislation that explicitly outlaws discrimination in our nation’s financial system so that Black and brown people can have complete access to financial services free from harassment," Brown added.

Warren, a former presidential candidate, said that discrimination by "big banks" is "denying communities of color the chance to build real economic security."

The Massachusetts senator added that the bill is "a step in the right direction to help root out the systemic racism that has pervaded our financial institutions for decades."

Booker, also a former presidential candidate, called access to financial institutions "a fundamental building block for economic security."

"But persistent, unchecked racial discrimination has unjustly blocked many Black and brown Americans from accessing financial services," Booker said. "Equal access to these critical services must be a right guaranteed by federal law and financial institutions must be held accountable for putting an end to systemic discrimination and harassment of any kind."

The lawmakers said the bill comes in response to a myriad of reports of discrimination in the banking sector, specifically linking to a New York Times investigation from June. The lawmakers added that the proposed legislation has been endorsed by the NAACP and a handful of other civil rights organizations.

Many critics have blamed systemic racism at financial institutions and beyond for the nation's large racial wealth gap.

In 2016, the typical white family had a net worth nearly 10 times that of a Black family, according to a Brookings Institute analysis. Moreover, an Urban Institute report from 2019 also found that the gap between Black and white homeownership rates in the U.S. had increased to 30.1% in 2017 -- a wider gap than when race-based discrimination against homebuyers in the U.S. was legal.

Protests over police brutality and systemic racism erupted across the country this summer and put renewed pressure on banks to address these issues.

Earlier this month, banking giant JPMorgan Chase pledged to invest $30 billion to help ameliorate the racial wealth gap in the U.S. and "reduce systemic racism against Black and Latinx people."

The investment bank said the $30 billion commitment over the next five years will come in the form of loans, equity and direct funding to promote affordable housing, grow Black- and Latinx-owned businesses, improve access to banking in communities of color and build a more diverse workforce.

Other major banking institutions including Citigroup and Bank of America have announced similar initiatives, committing $1 billion each so far.