Revising regulations
U.S. Senate bill includes plan to rollback mortgage reporting rules for banks.
WASHINGTON — Buried within new Senate legislation to roll back restraints on banks is a provision that would exempt an estimated 85 percent of all U.S. banks and credit unions from public reporting requirements, raising fears that discriminatory practices by lenders could go undetected.
The data that would be exempt from reporting includes the financial information of borrowers and loan applicants, along with their race and sex.
Some Democratic lawmakers, community activists and low-income housing advocates have raised the alarm over the prospect of diminished mortgage disclosures by banks. Removing the spotlight, they say, could allow lenders to unfairly deny loans or charge excessive interest and escape notice.
The legislation “would once again place lowincome and borrowers of color at risk of falling prey to the same unscrupulous lending practices that helped cause the Great Recession,” Marc Morial, president of the National Urban League, wrote in an open letter to the Senate. “We must preserve and strengthen these important protections and continue collecting the data that exposes disparities in the industry.”
The overall bill would alter key elements of the Dodd-Frank law enacted to prevent a repeat of the financial crisis 10 years ago that brought the U.S. economy to the brink of collapse. Buttressed by support from a number of Democrats, it has a strong chance of passage in the Republican-led Senate. A vote is expected this week. Prospects in the GOP-dominant House are unclear.
At the Senate bill’s core is a fivefold increase, to $250 billion, in the level of assets at which banks are deemed so big and plugged into the financial system that their failure could bring severe disruption.
The change would ease rules and oversight on more than two dozen large financial companies, including BB&T Corp., Fifth Third Bankcorp, SunTrust Banks and American Express. They’re not as big as the Wall Street megabanks, but they also got taxpayer bailouts during the 2008-09 financial meltdown fueled by the housing foreclosure crisis.
Less central to the bill is the data provision. It would exempt banks and credit unions from reporting requirements if they issue fewer than 500 home mortgage loans a year. That’s an estimated 85 percent of U.S. banks, according to data from the federal Consumer Financial Protection Bureau.