Axios, October 25, 2023, Banks Are About To Face Tougher Scrutiny Of Discrimination In Lending
Bank regulators finalized changes on Tuesday to a 1977 law meant to address racial discrimination in banking — particularly the practice of redlining, the previously federally-sanctioned practice of not providing home loans to Black borrowers in certain neighborhoods.
Under the current rules, regulators rate banks based on how they serve the communities they have a physical branch in. They look at mortgage lending, small business lending, and banking services (what share of branches are in low- or moderate-income communities, for example, and if there are low-cost or no-cost options.)
The new rules — developed by the Federal Reserve, FDIC, and Office of the Comptroller of the Currency — will allow regulators to evaluate banks based on online lending in areas where they don’t have a physical branch.
The updates represent a “significant expansion,” particularly at a time when more banks are closing branches, Jesse Van Tol, CEO of the NCRC, tells Axios.