Big Banks Argue Discrimination is Fair
It’s not satire. It’s a dangerous lawsuit against CFPB.
Ask a reasonable person if discrimination on the basis of race or religion is unfair. The odds are good – very good, according to this AFR poll, – that you’ll get a resounding “yes,” a polite “of course,” or even an incredulous “are you kidding?” Yes. Discrimination. Is. Unfair.
But if you try to convince the U.S. Chamber of Commerce, the American Bankers Association, and the Consumer Bankers Association that discrimination is unfair, you won’t get a “yes.” You get a lawsuit, with multiple awful lines of attack, that stands a good chance of succeeding. And that’s not satire.
The suit, filed last week, aims to protect the ability of big banks to discriminate on the basis of race or religion. It exploits the extreme rightward turn of the U.S. judiciary and the Supreme Court’s penchant for siding with corporate interests. It tests a new court-imposed avenue for striking down regulations, one that could let the business lobby challenge rules on labor, antitrust, and environmental protection.
And it includes as one goal the long-held aspiration of the bank lobby to destroy a key pillar of the Consumer Financial Protection Bureau (CFPB), the only federal agency devoted to protecting consumers in the market for financial services.
The lawsuit, in short, is hardly discriminating in its targeting. Wall Street and its corporate lobbyist friends have decided to reach for the stars. Their stars, anyway.
The Chamber, the bank lobbies, and a clutch of Texas groups filed the lawsuit in response to a decision by the Consumer Financial Protection Bureau to tweak its examination manual. This document outlines how CFPB oversees big banks on their compliance with federal consumer finance laws.
Think of it as an open-book test. One that, apparently, banks like JPMorgan Chase, Bank of America, Truist, Wells Fargo, and U.S. Bank fear they would fail. Otherwise, why sue?
In March, CFPB announced that it would use its statutory authority to penalize unfair, deceptive, and abusive acts. Specifically, it would in the future consider that discrimination – like over race or religion – is an unfair practice.
“When a person is denied access to a bank account because of their religion or race, this is unambiguously unfair,” CFPB Director Rohit Chopra said at the time. “We will be expanding our anti-discrimination efforts to combat discriminatory practices across the board in consumer finance.” (CFPB has also highlighted its work in heading off religious discrimination specifically.)
CFPB’s authority over discrimination in lending specifically is covered under the Equal Credit Opportunity Act. Here CFPB is putting banks on notice that other kinds of discriminatory practices, like who gets to open a checking account, or who gets targeted by advertising, will also face scrutiny. Because – check out this legal analysis – discrimination is unfair.
The banks represented by the Chamber, ABA and CBA have unfortunately provided plenty of reasons for why this additional oversight that CFPB announced is essential. Citigroup prevented a Muslim woman from adding her husband as a co-signer on a savings account. JPMorgan Chase barred a Black physician from opening a checking account with her first paycheck. Wells Fargo called the cops on a Black woman who wanted to cash a $200 check!
#BankingWhileBlack is not satire but bitter reality for too many people.
It’s not about discrimination in lending alone. It’s about discrimination in services that are essential to modern life. And it’s something CFPB, whose business is consumer protection for all people, should be pro-actively rooting out at the source.
The Chamber and the big banks are also trying to drag their disputes with CFPB into a more favorable arena, namely a judiciary with a strong pro-corporate, right-wing bent. Further up the chain, they have a Supreme Court giddy at the prospect of stopping government efforts that help real people, both legacies of the Trump administration. They filed the suit in the Fifth Circuit, which Trump appointees have turned into a right-wing bastion, and drew a judge infamous for overturning an eviction moratorium during the COVID-19 pandemic.
If it goes to the Supreme Court? Well, the Court of Chief Justice John Roberts rules for Chamber-backed cases 70 percent of the time according to one study. It’s a safe space for corporate interests.
Moreover, Wall Street is weaponizing West Virginia vs. EPA, the bombshell decision that undercut the Environmental Protection Agency’s power to fight climate change, as a basis for its case. It’s now clear business lobbies will use this case to hamper action on vital issues of all sorts, be it consumer protection, antitrust, labor, securities law, or environmental rules.
Lurking behind the marquee effort to dodge accountability for discrimination is a long-held goal of Wall Street, namely to destroy a key pillar of the CFPB. When Congress created the agency in 2010, it granted a dedicated funding stream from the Federal Reserve, which earns money from its operations in capital markets. That meant that bank lobbyists can’t have their allies in Congress choke off CFPB appropriations, a common tactic with other regulators.
A well-led agency is effective at protecting consumers – and Chopra provides vibrant enough leadership that he scares bankers – so the lawsuit is an effort at destroying-by-defunding. Chief Justice Roberts even hinted in a prior case that he’d look favorably on a challenge to CFPB’s funding.
Then we come to the sheer hypocrisy at work here.
The murder of George Floyd on May 25, 2022 led to nationwide attention to the problems of structural racism, an environment that compelled at least lip service from Wall Street’s biggest banks. But lip service does no service at all to racial equity in the United States.
JPMorgan Chase, the largest U.S. bank, published a photo of its CEO, Jamie Dimon, kneeling in front of a bank vault. That cringeworthy scene merited satire enough at the time. But since JPMorgan is one of the main banks, only two years later, behind a lawsuit that aims to avoid reckoning with discrimination, it may be that satire has finally died.