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Bloomberg: What does Trump have against fair lending?

Bloomberg, July 11, 2019: What does Trump have against fair lending? 

For more than four decades, U.S. law has required banks to lend fairly and equitably, meaning that they must serve everyone in their communities on equal terms, and can’t discriminate on the basis of race or class.

So do they? If Donald Trump’s administration has its way, the world might never know.

In 1975, Congress created the Home Mortgage Disclosure Act to ensure that U.S. authorities — and the broader public — would have the data needed to ensure that banks were complying with laws on fair lending and community investment. It required institutions that made mortgage loans to report information such as the race of borrowers and the type and amount of loans.

Yet the subprime-lending boom of the 2000s exposed unacceptable blind spots. Without information on credit scores, actual interest rates, debt ratios and specific loan features, regulators couldn’t see the extent to which lending standards were deteriorating or to which low-income borrowers — particularly minorities — were being steered into unduly expensive and badly designed mortgages. This blindness allowed the practices to get worse and made the resulting crisis more destructive.

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Redlining and Neighborhood Health

Before the pandemic devastated minority communities, banks and government officials starved them of capital.

Lower-income and minority neighborhoods that were intentionally cut off from lending and investment decades ago today suffer not only from reduced wealth and greater poverty, but from lower life expectancy and higher prevalence of chronic diseases that are risk factors for poor outcomes from COVID-19, a new study shows.

The new study, from the National Community Reinvestment Coalition (NCRC) with researchers from the University of Wisconsin–Milwaukee Joseph J. Zilber School of Public Health and the University of Richmond’s Digital Scholarship Lab, compared 1930’s maps of government-sanctioned lending discrimination zones with current census and public health data.

Table of Content

  • Executive Summary
  • Introduction
  • Redlining, the HOLC Maps and Segregation
  • Segregation, Public Health and COVID-19
  • Methods
  • Results
  • Discussion
  • Conclusion and Policy Recommendations
  • Citations
  • Appendix

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