The Trump administration’s moves to change -- some say “gut” -- the nation’s fair housing policies may have awakened a sleeping giant.
And the reason is pretty straightforward: It’s simply bad for business.
Besides being unfair, discrimination against consumers on the basis of race, gender or income means fewer people will be renting or buying houses.
Among the fair housing building blocks the administration has been trying to weaken are the long-standing Fair Housing and the Community Reinvestment Acts, as well as the Consumer Financial Protection Bureau, which was created only a decade ago in response to the mortgage crisis, largely to protect borrowers.
Responses from proponents of federal protections have ranged from jawboning by consumer advocates and real estate trade groups to congressional hearings. California is going even further, by proposing to create its own version of the CFPB to make up for what it perceives as the federal watchdog taking its eye off the ball.
“As the Trump administration undermines and weakens the rules that protect consumers from predatory businesses, California is filling the void and stepping up to protect families and consumers,” Gov. Gavin Newsom told local media recently.
The Golden State’s proposed Department of Financial Protection and Innovation reportedly will be given more staff and money than the current Department of Business Oversight, which it would replace.
The state is going its own way because the White House is challenging the structure of the CFPB, arguing that it infringes on the power of the president. The case is now before the Supreme Court.
“The structure of the Bureau, including the for-cause restriction on the removal of its single director, violates the Constitution’s separation of powers,” the administration is arguing. “The United States previously informed this court that it has also concluded the statutory restriction on the president’s authority to remove the director violates the Constitution’s separation of powers, and that the question would warrant this Court’s review in an appropriate case.”
Consumer advocates are also rankled by recent changes to the Fair Housing Act’s Affirmatively Furthering Fair Housing standard, saying they eviscerate fair housing protections.
According to an analysis by the Mortgage Bankers Association, the proposed FHA changes “would discontinue rules promulgated by the Obama administration that require communities to address racial discrimination issues in housing. The rule proposes to reduce regulatory burdens to governments by eliminating an assessment tool used to map racial segregation.”
After a quick huddle with the Department of Housing and Urban Development, another prominent housing trade group, the National Association of Realtors, came out reaffirming the group’s own commitment to fair housing.
Elsewhere, Sam Tepperman-Gelfant, deputy managing attorney at nonprofit Public Advocates, said, “The proposal would further an already devastating affordable housing crisis caused by policies that put the profits of developers, speculators and billionaires over our right to have a place to call home.”
And Malcolm Torrejon Chu, director of programs at the Right to the City Alliance, said that “the proposed changes will further target communities of color and increase racist discriminatory housing policies.”
Meanwhile, upcoming changes to the Community Reinvestment Act, which has been in effect since 1977 and was last updated in 1995, have consumer advocates crying foul and one key congresswoman alleging cheating.
In December, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency proposed to “modernize” the CRA to ensure “increased bank activity in low- and moderate-income communities where there is significant need for credit, more responsible lending, greater access to banking services, and improvements to critical infrastructure.”
But consumer groups think the changes will only weaken the CRA.
What the changes will really do, the National Community Reinvestment Coalition maintains, is “weaken affordable housing standards” by devaluing bank branches in low- and moderate-income neighborhoods, scaling back bank accountability and excusing small banks from rigorous CRA exams.
“There is no doubt that these proposed changes will be disastrous for low- to moderate-income communities,” says NCRC chief executive Jesse Van Tol.
The rule will become effective at the end of the period allowed for receiving comments, but one congressional housing advocate thinks there is some hanky-panky going on. House Financial Services Committee Chair Maxine Waters, D-Calif., is worried that someone has been stuffing the ballot box, seeking to validate changes to the landmark bill.
Waters, whose committee recently held a hearing on the proposed changes, has written to the Comptroller of the Currency and the chairman of the FDIC, saying “certain special interest groups have submitted comments in other rule-makings while posing as consumers, small-business owners and other stakeholders. These fraudulent comments undermine legitimate debate on proposed rules by creating the false appearance that a position has widespread, grassroots support.”
Cheating like this might not seem as momentous as baseball’s sign-stealing crisis, but the CRA has a lot of fans -- especially considering it can be used to challenge big banking mergers, often causing the banks to open their wallets to promise more mortgage money for more people.
Waters also accused regulators of trying to push the changes through “as soon as possible” by cutting the customary 120-day comment period in half.
On the substances of the proposed changes, she maintains the Community Reinvestment Act would become the “Community Disinvestment Act,” and would lead to a “widespread” retreat of bank investment in these communities.
-- Freelance writer Mark Fogarty contributed to the writing of this column.