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	<title> - HOW INVIDIOUS DISCRIMINATION WORKS AND HURTS: AN EXAMINATION OF LENDING DISCRIMINATION AND ITS LONG-TERM ECONOMIC IMPACTS ON BORROWERS OF COLOR</title>
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	[House Hearing, 117 Congress]
	[From the U.S. Government Publishing Office]





	HOW INVIDIOUS DISCRIMINATION

	WORKS AND HURTS: AN EXAMINATION

	OF LENDING DISCRIMINATION AND

	ITS LONG-TERM ECONOMIC IMPACTS

	ON BORROWERS OF COLOR

	=======================================================================

	VIRTUAL HEARING

	BEFORE THE

	SUBCOMMITTEE ON OVERSIGHT
	AND INVESTIGATIONS

	OF THE

	COMMITTEE ON FINANCIAL SERVICES

	U.S. HOUSE OF REPRESENTATIVES

	ONE HUNDRED SEVENTEENTH CONGRESS

	FIRST SESSION

	__________

	FEBRUARY 24, 2021

	__________

	Printed for the use of the Committee on Financial Services

	Serial No. 117-5



	[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]




	______


	U.S. GOVERNMENT PUBLISHING OFFICE
	43-992 PDF WASHINGTON : 2021




	HOUSE COMMITTEE ON FINANCIAL SERVICES

	MAXINE WATERS, California, Chairwoman

	CAROLYN B. MALONEY, New York PATRICK McHENRY, North Carolina,
	NYDIA M. VELAZQUEZ, New York Ranking Member
	BRAD SHERMAN, California FRANK D. LUCAS, Oklahoma
	GREGORY W. MEEKS, New York BILL POSEY, Florida
	DAVID SCOTT, Georgia BLAINE LUETKEMEYER, Missouri
	AL GREEN, Texas BILL HUIZENGA, Michigan
	EMANUEL CLEAVER, Missouri STEVE STIVERS, Ohio
	ED PERLMUTTER, Colorado ANN WAGNER, Missouri
	JIM A. HIMES, Connecticut ANDY BARR, Kentucky
	BILL FOSTER, Illinois ROGER WILLIAMS, Texas
	JOYCE BEATTY, Ohio FRENCH HILL, Arkansas
	JUAN VARGAS, California TOM EMMER, Minnesota
	JOSH GOTTHEIMER, New Jersey LEE M. ZELDIN, New York
	VICENTE GONZALEZ, Texas BARRY LOUDERMILK, Georgia
	AL LAWSON, Florida ALEXANDER X. MOONEY, West Virginia
	MICHAEL SAN NICOLAS, Guam WARREN DAVIDSON, Ohio
	CINDY AXNE, Iowa TED BUDD, North Carolina
	SEAN CASTEN, Illinois DAVID KUSTOFF, Tennessee
	AYANNA PRESSLEY, Massachusetts TREY HOLLINGSWORTH, Indiana
	RITCHIE TORRES, New York ANTHONY GONZALEZ, Ohio
	STEPHEN F. LYNCH, Massachusetts JOHN ROSE, Tennessee
	ALMA ADAMS, North Carolina BRYAN STEIL, Wisconsin
	RASHIDA TLAIB, Michigan LANCE GOODEN, Texas
	MADELEINE DEAN, Pennsylvania WILLIAM TIMMONS, South Carolina
	ALEXANDRIA OCASIO-CORTEZ, New York VAN TAYLOR, Texas
	JESUS ``CHUY'' GARCIA, Illinois
	SYLVIA GARCIA, Texas
	NIKEMA WILLIAMS, Georgia
	JAKE AUCHINCLOSS, Massachusetts

	Charla Ouertatani, Staff Director
	Subcommittee on Oversight and Investigations

	AL GREEN, Texas Chairman

	EMANUEL CLEAVER, Missouri ANDY BARR, Kentucky, Ranking
	ALMA ADAMS, North Carolina Member
	RASHIDA TLAIB, Michigan BARRY LOUDERMILK, Georgia
	JESUS ``CHUY'' GARCIA, Illinois ALEXANDER X. MOONEY, West Virginia
	SYLVIA GARCIA, Texas DAVID KUSTOFF, Tennessee
	NIKEMA WILLIAMS, Georgia WILLIAM TIMMONS, South Carolina,
	Vice Ranking Member

	C O N T E N T S

	----------
	Page
	Hearing held on:
	February 24, 2021............................................ 1
	Appendix:
	February 24, 2021............................................ 31

	WITNESSES
	Wednesday, February 24, 2021

	Cooper, Cheryl R., Analyst, Financial Economics Division,
	Congressional Research Service................................. 12
	Darity, William, Jr., Professor of Public Policy, African and
	African-American Studies, and Economics, Duke University; and
	Director, Samuel DuBois Cook Center on Social Equity........... 5
	Espinoza, Frances, Executive Director, North Texas Fair Housing
	Center......................................................... 10
	Perry, Andre M., Senior Fellow, Metropolitan Policy Program, the
	Brookings Institution.......................................... 9
	Rice, Lisa, President and CEO, National Fair Housing Alliance
	(NFHA)......................................................... 7

	APPENDIX

	Prepared statements:
	Cooper, Cheryl R............................................. 32
	Darity, William, Jr.......................................... 44
	Espinoza, Frances............................................ 50
	Perry, Andre M............................................... 52
	Rice, Lisa................................................... 60

	Additional Material Submitted for the Record

	Green, Hon. Al:
	Written statement of the Appraisal Institute................. 77
	Written statement of Engine.................................. 79
	``Financial Resilience Challenges During the Pandemic,''
	Federal Reserve Bank of Atlanta............................ 112
	``Mortgage Prepayment, Race, and Monetary Policy,'' Federal
	Reserve Bank of Boston..................................... 115
	GAO study, ``Fair Lending, Access, and Retirement Security... 196


	HOW INVIDIOUS DISCRIMINATION

	WORKS AND HURTS: AN EXAMINATION

	OF LENDING DISCRIMINATION AND

	ITS LONG-TERM ECONOMIC IMPACTS

	ON BORROWERS OF COLOR

	----------


	Wednesday, February 24, 2021

	U.S. House of Representatives,
	Subcommittee on Oversight
	and Investigations,
	Committee on Financial Services,
	Washington, D.C.
	The subcommittee met, pursuant to notice, at 3:05 p.m., via
	Webex, Hon. Al Green [chairman of the subcommittee] presiding.
	Members present: Representatives Green, Cleaver, Adams,
	Tlaib, Garcia of Illinois, Williams of Georgia; Barr,
	Loudermilk, Mooney, and Taylor.
	Ex officio present: Representative Waters.
	Chairman Green. The Oversight and Investigations
	Subcommittee will come to order.
	Without objection, the Chair is authorized to declare a
	recess of the subcommittee at any time. Also, without
	objection, members of the full Financial Services Committee who
	are not members of this subcommittee are authorized to
	participate in today's hearing.
	As a reminder, I ask all Members to keep themselves muted
	when they are not being recognized by the Chair to minimize
	disturbances while Members are asking questions of our
	witnesses. The staff has been instructed not to mute Members,
	except when a Member is not being recognized by the Chair and
	there is inadvertent background noise.
	Members are also reminded that all House rules relating to
	order and decorum apply to this remote hearing. And Members may
	only participate in only one remote proceeding at a time. If
	you are participating today, please keep your camera on, and if
	you choose to attend a different remote proceeding, please turn
	your camera off.
	If Members wish to be recognized during the hearing, please
	identify yourself by name to facilitate recognition by the
	Chair.
	The title of today's hearing is, ``How Invidious
	Discrimination Works and Hurts: An Examination of Lending
	Discrimination and Its Long-Term Economic Impacts on Borrowers
	of Color.''
	We will now move to opening statements, and, in so doing, I
	will recognize myself for 4 minutes for an opening statement,
	with the understanding that the Chair of the Full Committee,
	Chairwoman Waters, will be present at some point, and will
	receive 1 minute of the additional time that we have for
	opening statements.
	Friends, lie on a mortgage application to secure a loan,
	and you are likely to get caught and criminally prosecuted for
	mortgage fraud, with jail time as a consequence. Lie as a loan
	originator to deny a loan to a person of color, and you are not
	likely to get caught, and if you do get caught, a civil
	monetary fine is likely the consequence, and little more than
	the cost of doing business.
	H.R. 166, the Fair Lending for All Act, provides the best
	tool available--testing--to catch, prosecute, and deter these
	predatory criminal lenders.
	First, H.R. 166 would provide critical tools for detecting,
	ending, and sanctioning discrimination that would otherwise go
	undetected. It would deter the predatory lending that
	perpetuates race-based differences in wealth, asset
	accumulations, income, and financial security.
	There is no enforcement tool--some things bear repeating--
	there is no enforcement tool with the utility of matched-pair
	testing. This is why H.R. 166 creates a dedicated Federal
	office within the Consumer Financial Protection Bureau (CFPB),
	which would be charged with conducting such testing.
	Second, H.R. 166 would expand the Equal Credit Opportunity
	Act's (ECOA's) terms to expressly prohibit lending
	discrimination against LGBTQ+ persons.
	Finally, H.R. 166 would establish criminal penalties for
	lenders and lending officials who engage in knowing and willful
	discrimination in violation of ECOA.
	This concludes my opening statement.
	At this time, without objection, I would like to place in
	the record the following documents: a GAO report dated February
	24, 2021; a document styled, ``Financial Resilience Challenges
	During the Pandemic,'' which is an article from the Atlanta
	Federal Reserve Bank examining the history of discriminatory
	policies that leave many Black and Hispanic households less
	resilient in the face of economic shock caused by the pandemic;
	and a document styled, ``Mortgage Prepayment, Race, and
	Monetary Policy,'' a working paper from the Boston Federal
	Reserve Bank which finds that Black and Hispanic borrowers pay
	more than 50-basis-points-higher interest rates than White
	borrowers in a large representative sample of loans insured by
	Fannie Mae and Freddie Mac.
	Without objection, it is so ordered.
	Having made my opening statement, it is now my honor to
	yield to the ranking member of the subcommittee, Mr. Barr, for
	5 minutes for his opening statement.
	Mr. Barr. Thank you, Mr. Chairman. I appreciate you
	yielding, and I appreciate you holding today's hearing.
	Thank you also to our witnesses for appearing today.
	Discrimination in lending and other financial services is
	wrong, it is illegal, and it should not be tolerated. There is
	no room for compromise on that point.
	While discrimination is illegal, that does not mean that
	there are not large pockets of the population who continue to
	be left behind by our banking system. It is important that we
	review and address those problems holistically. Our discussion
	on the economic impacts of inequities in the financial system
	should extend to all unbanked and underbanked groups.
	Economic recovery is well under way in the wake of the
	COVID pandemic. Unfortunately, many Americans continue to
	struggle financially. The pandemic has exposed and exacerbated
	certain weaknesses in our financial system, highlighting how
	large portions of the population still have trouble accessing
	credit. Every American should have equal access to our
	financial system regardless of their race or gender, whether
	they live in urban or in rural America, or any other factor.
	One area of particular concern to me is the access to
	capital and other financial services in rural areas. According
	to a recent FDIC study, people in rural areas are more likely
	than their urban and suburban counterparts to visit a bank
	branch in person to do their banking. Unfortunately, the number
	of bank branches across the country continues to decrease, and
	the pace of de novo bank formation has slowed significantly
	compared to pre-financial crisis levels.
	As there has been a movement towards online banking, we
	know the challenges that rural Americans face with respect to
	rural broadband, and that is another impediment.
	There were 181 de novo charters granted in 2007, but
	between 2010 and 2019, an average of fewer than 10 new banks
	opened per year. A recent Federal Reserve study shows that 51
	percent of the 3,114 counties in the United States saw net
	declines in the number of bank branches between 2012 and 2017.
	These declines in bank branches disproportionately hit rural
	communities. A total of 794 rural counties lost a combined
	1,553 bank branches over the 5-year period, a 14-percent
	decline.
	The negative financial impacts on rural counties of branch
	closures are perpetuated by the continuing difficulties due to
	burdensome regulations and other roadblocks of de novo
	community bank formation.
	The Federal Reserve report identified 44 counties
	considered deeply affected by trends in bank closures and
	consolidation, which it defines as counties that had 10 or
	fewer branches in 2012, and lost at least 50 percent of those
	branches by 2017. Eighty-nine percent of the deeply affected
	counties are rural counties, including Nicholas County in my
	district, and counties in the districts of several of my
	colleagues.
	The current framework of Federal, State, and local laws
	prohibits discrimination of any kind in lending. Financial
	regulators have developed robust tools to ensure that regulated
	firms play by those rules. To the extent that firms are failing
	to comply with those rules, or that additional statutory
	authority is needed to combat discrimination, we must act.
	However, we must also be cautious about imposing additional
	restrictions and regulations on lenders that do not accomplish
	a specific goal, and monitor potential impacts of our actions
	on the widespread availability of financing to creditworthy
	borrowers.
	Emerging technology has allowed people previously outside
	the banking system to access financial services and has
	enhanced lenders' ability to tailor their products to the
	specific characteristics of the borrower based on race-blind
	metrics. Meaningful restrictions on risk-based pricing will do
	more harm than good, as creditworthy borrowers pay more for the
	capital they need.
	Promoting across-the-board financial inclusion should be a
	top bipartisan priority for this subcommittee. I appreciate the
	opportunity to discuss ways to ensure that more people,
	including those currently underserved in the market, have easy,
	fair, and safe access to financial services.
	I look forward to working with Chairman Green to ensure
	that discrimination does not occur in lending, and to promote
	policies that expand access to credit and lead to long-term
	economic growth. And, again, the warning is to not do away with
	risk-based pricing, which I think would curtail and restrict
	access to credit for creditworthy borrowers.
	I look forward to hearing from our witnesses today, and I
	yield back the balance of my time.
	Chairman Green. Thank you, Mr. Ranking Member. I appreciate
	your commentary, and I look forward to working with you.
	I am told that the Chair of the Full Committee, Chairwoman
	Waters, has arrived, so I will now yield to Chairwoman Maxine
	Waters for 1 minute.
	Chairwoman Waters. Thank you so very much. Good afternoon,
	Chairman Green.
	The discriminatory lending practices of the 20th Century
	continue to affect minority communities long after they are
	repealed. The effects of decades of government-sanctioned
	discrimination continue to plague our housing and lending
	markets today, ultimately hindering the ability of households
	of color to build equity and accumulate wealth through
	homeownership relative to White households.
	Since home equity is the primary source of wealth for most
	families, disparities in homeownership and home equity are key
	drivers of the racial wealth gap. So, I look forward to hearing
	from our witnesses today about what we can do to remedy the
	continuing economic effects of discrimination.
	Thank you, and I yield back the balance of my time.
	Chairman Green. Thank you, Madam Chairwoman.
	Let me make an announcement, if I may. We will have
	additional votes, and the staff has indicated that we will make
	a great attempt to wait until the first vote has expired, or
	nearly expired. This way, we will be able to cast two votes and
	then come back to the hearing. My hope is that we will get this
	done as expeditiously as possible.
	Today, I would like to welcome each of our witnesses. And I
	am pleased to introduce this panel: William Darity, Jr.,
	professor of public policy, African and African-American
	studies, and economics at Duke University, as well as the
	director of the Samuel DuBois Cook Center on Social Equity;
	Lisa Rice, president and CEO of the National Fair Housing
	Alliance; Andre Perry, senior fellow at the Metropolitan Policy
	Program at the Brookings Institution; Frances Espinoza,
	executive director of the North Texas Fair Housing Center; and
	Cheryl Cooper, an analyst for the Financial Economics Division
	at the Congressional Research Service.
	Witnesses are reminded that your oral testimony will be
	limited to 5 minutes. You should be able to see a timer--and
	this timer should be on your screen--that will indicate how
	much time you have left, and a chime will go off at the end of
	your time. I would ask that you be mindful of the timer, and
	quickly wrap up your testimony if you hear the chime, so that
	we can be respectful of both the witnesses' and the committee
	members' time. And without objection, your written statements
	will be made a part of the record.
	Once the witnesses finish their testimony, each Member will
	have 5 minutes to ask questions. And may I remind Members to
	please get your questions and answers in within that 5-minute
	time period. Let me restate this differently; you should not,
	at the end of your 5 minutes, have multiple questions to be
	answered. Please be mindful of the time of other Members in
	trying to get your time in within the 5 minutes.
	Professor Darity, you are now recognized for 5 minutes to
	give an oral presentation of your testimony.

	STATEMENT OF WILLIAM DARITY, JR., PROFESSOR OF PUBLIC POLICY,
	AFRICAN AND AFRICAN-AMERICAN STUDIES, AND ECONOMICS, DUKE
	UNIVERSITY; AND DIRECTOR, SAMUEL DUBOIS COOK CENTER ON SOCIAL
	EQUITY

	Mr. Darity. Thank you, Chairman Green, Ranking Member Barr,
	and members of the subcommittee.
	Discrimination in access to credit and the terms of credit
	is an important barrier to Black wealth accumulation.
	Elimination of this barrier, albeit wholly desirable, will not
	eliminate the gaping chasm in wealth between Black and White
	Americans.
	The fundamental reason for Black-White differences in
	wealth is not high Black indebtedness. The fundamental reason
	is low Black asset holdings.
	A Prosperity Now study in 2019 reported that median Black
	household liabilities were $30,800, while the median White
	household liabilities were more than twice as large, at
	$73,800. However, White households had a median level of assets
	valued in excess of $260,000, in contrast with the median Black
	households' assets, valued at $55,900.
	The median Black household had 40 percent of the debt of
	the median White household but only 20 percent of the assets.
	Correspondingly, the ratio of assets to debts for Black
	households was 1.6, versus 2.8 for White households, both
	measured at the median.
	The magnitude of the racial wealth gap, driven
	predominantly by a racial difference in asset ownership, is
	staggering. The 2019 Survey of Consumer Finances indicates that
	the Black-White wealth gap at the median was $164,000, and at
	the mean, it was substantially larger, at $840,900.
	Assuming an average household size of 3 persons, the median
	gap per person was $52,500 and the mean gap was $280,000. These
	are conservative estimates of per-capita differentials because
	the average White household size is actually less than 3
	people.
	Many observers treat the median gap as the target for
	closing the racial wealth gap in the United States. In this
	context, it may be more appropriate to set the more demanding
	target at the mean.
	Wealth is so densely concentrated in the United States that
	90 percent of the wealth held by White Americans is in the
	possession of White households with a net worth above the White
	median. Close to 99 percent of White household wealth is held
	by those with a net worth above the national median,
	approximately $100,000. Twenty-five percent of White households
	have a net worth in excessive of $1 million, in contrast with
	only 4 percent of Black households.
	The limitations of an exclusive focus on debt reduction
	rather than asset building comes into stark relief when
	considering a policy of student loan relief. Whether one
	eliminates student debt by trying to erase the difference at
	the median or the mean, there will be at best an incremental
	effect on the racial wealth differential.
	The net reduction in the gap will be $1,856 after we adjust
	for the enrollment rates that are different between the two
	communities. And, therefore, the reduction amounts to only 3
	percent of the total median gap of $52,500. It amounts to less
	than 1 percent at the mean gap of $280,000.
	Indeed, the key to understanding the sources of the racial
	wealth gap is government policy that supported the
	underdevelopment of asset accumulation in the Black community.
	In January 1865, General William T. Sherman, after
	Secretary of War Edwin Stanton and he held a consultation with
	a group of Black leaders in Savannah, Georgia, issued Special
	Order No. 15. His directive assigned 5.3 million acres of land,
	stretching from the Sea Islands of South Carolina to the
	portion of northern Florida bordered by the St. Johns River, as
	a site for settlement and property for the newly emancipated.
	Here was an intended preliminary phase of a substantial
	land reform on behalf of the formerly enslaved that would have
	amounted to at least 40 million acres of land for the 4 million
	persons released from bondage.
	Ultimately, only 40,000 persons settled on 400,000 acres,
	but even that small allotment was lost by the end of the year.
	Andrew Johnson, Lincoln's successor, ended the land allocation
	program and restored the properties to the former slaveholders.
	The promise of 40-acre land grants remained unfulfilled.
	Simultaneously, the Federal Government, under the auspices
	of the Homestead Act of 1862, was distributing 160-acre tracts
	of lands to upwards of 1.5 million White families in the
	western territories. This huge asset-building policy resulted
	in benefits carrying over to a conservative estimate of 45
	million White living descendants of Homestead Act patents.
	The racial wealth gap in the United States originates with
	the failure to give the formerly enslaved 40 acres, while White
	Americans, including new immigrants, were given 160 acres of
	land.
	Conditions worsened with wave upon wave of White massacres
	that took place between the end of the Civil War and World War
	II. In the Red Summer of 1919, upwards of 35 White terrorist
	actions took place across the country in locations ranging from
	Chicago, Illinois; to Omaha, Nebraska; to Washington, D.C.; to
	Elaine, Arkansas.
	The most famous of these--
	Chairman Green. Professor, I am going to have to ask that
	you summarize quickly, please.
	Mr. Darity. Okay--took place in Tulsa, Oklahoma, in 1921.
	I would add that the destruction of Black property and the
	appropriation of Black property that was lost in that period of
	time was compounded by the policies in the 20th Century that
	discriminatorily provided support for asset building in the
	form of homeownership.
	Indeed, the effects of these disparities transmitted across
	generations resulted in the contemporary Black-White wealth
	gap. And the disproportionate growth in Black debt matters in
	explaining America's racial wealth gap, but the
	disproportionate deprivation of Black assets matters far more.
	By all means, we should take steps to make the credit
	market more racially equitable, but if our goal is to eliminate
	the Black-White difference in wealth, the focus must be placed
	on building Black assets to a level consistent with White asset
	ownership.
	[The prepared statement of Mr. Darity can be found on page
	44 of the appendix.]
	Chairman Green. Thank you, Professor.
	Ms. Rice, you are now recognized for 5 minutes to give your
	oral presentation.

	STATEMENT OF LISA RICE, PRESIDENT AND CEO, NATIONAL FAIR
	HOUSING ALLIANCE (NFHA)

	Ms. Rice. Chairwoman Waters, Subcommittee Chair Green,
	Subcommittee Ranking Member Barr, and other members of the
	subcommittee, I want to first thank you for inviting me to talk
	about this really important issue.
	Housing and lending discrimination have been a part of the
	United States since its inception, and have helped create the
	racial wealth and homeownership gaps that Professor Darity has
	just spoken about.
	Due to government-sanctioned discriminatory policies as
	well as private-market practices, underserved groups have been
	systemically excluded from wealth-building opportunities such
	as homeownership.
	These groups still experience high levels of
	discrimination. There are over 4 million instances of housing
	discrimination each year. Redlining, which persists in various
	forms today, real estate sales discrimination, appraisal bias,
	lending discrimination, and tech bias are significant barriers
	that keep the dream of homeownership from becoming a reality
	for many people, and contribute to the racial wealth gap.
	Moreover, structural barriers, such as the dual credit
	market, segregation, and restrictive zoning ordinances, create
	systemic impediments which significantly prohibit the ability
	of people of color to access fair housing and fair lending
	opportunities and perpetuates the racial wealth and
	homeownership gaps.
	The segregation of people based on race, coupled with the
	segregation of resources, drives many of the disparities in
	health, education, wealth, and many other areas. And these
	structural barriers, these structural inequities are a reason
	that Blacks, Latinos, and Native Americans are contracting and
	dying from the COVID virus at disproportionately higher rates
	than their White counterparts.
	Segregation is also a driver of the racial homeownership
	gaps. The homeownership rate for Black Americans, for example,
	is where it was when the Fair Housing Act was passed in 1968.
	And the homeownership gap between Blacks and Whites is as wide
	today as it was in 1890.
	There are many ways that invidious discrimination harms
	communities. For example, many of the technologies used in the
	housing and financial services space are biased, and
	discriminate against consumers of color. Tenant screening
	selection tools, automated underwriting systems, credit scoring
	models, risk-based pricing systems, and digital marketing
	platforms all have discriminatory outcomes and lock people out
	of housing opportunities.
	Too many people experience discrimination when they seek to
	access housing and housing-related opportunities. Newsday
	recently completed an in-depth testing project on Long Island,
	New York, in which they found that 49 percent of African
	Americans, 39 percent of Hispanics, and 19 percent of Asian
	Americans experienced discrimination, including racial
	steering.
	Real estate discrimination can take on myriad forms, and
	our recent lawsuit against Redfin illustrates that: NFHA and
	nine of our member organizations conducted a comprehensive
	investigation of Redfin, one of the nation's largest real
	estate companies. The investigation uncovered disturbing
	practices that suggested really wide-scale discrimination and
	modern-day technology-based real estate redlining. The groups
	found that Redfin offered its best available service at
	significantly higher rates in extremely White communities, and
	offered no service for homes in communities of color at much
	greater rates than in predominantly White areas.
	Appraisal bias and lending discrimination are also still
	too common. Analysis of Home Mortgage Disclosure Act (HMDA)
	data revealed that communities of color are still being
	redlined by mainstream financial institutions.
	One way to overcome discrimination is to increase funds for
	testing programs. And the Supreme Court has stated that testing
	is one of the best mechanisms for ferreting out discrimination.
	This is why the National Fair Housing Alliance supports the
	Fair Lending for All Act, which would help address longstanding
	barriers to fair and equal credit by adding sexual orientation
	and gender identity protections to the Equal Credit Opportunity
	Act, but would also make it illegal to discriminate against
	people based on geographical location, and re-empower the
	Consumer Financial Protection Bureau (CFPB) to address fair-
	lending issues and to test for fair-lending violations.
	And I thank you.
	[The prepared statement of Ms. Rice can be found on page 60
	of the appendix.]
	Chairman Green. Thank you very much, Ms. Rice, for your
	testimony.
	Mr. Perry, you are now recognized for 5 minutes to give an
	oral presentation of your testimony.

	STATEMENT OF ANDRE M. PERRY, SENIOR FELLOW, METROPOLITAN POLICY
	PROGRAM, THE BROOKINGS INSTITUTION

	Mr. Perry. Chairwoman Waters, Chairman Green, Ranking
	Member Barr, Vice Ranking Member Timmons, thank you for
	inviting me to testify today on this extremely important issue
	that affects millions of people across the country.
	``We are here today because we are tired. We are tired of
	paying more for less.''
	Dr. Martin Luther King, Jr., said those words in 1966, to
	35,000 people in Chicago's Soldier Field, as part of the
	Chicago Freedom Movement, also known as the Chicago Open
	Housing Movement. Dr. King went on to relay housing price
	differences that resulted in Black people paying higher rents
	in Black-majority communities for worse housing than their
	White counterparts.
	``Now is the time to make real the promises of democracy,''
	Dr. King declared. ``Now is the time to open the doors of
	opportunity to all of God's children.''
	More than half a century later, now is still the time.
	According to the most recent Census figures, the Black
	homeownership rate in America is 46 percent, almost the exact
	same level that it was when Dr. King spoke in 1966. This is
	compared to the White homeownership rate, which is roughly 74
	percent.
	Even as overall U.S. homeownership has grown over the last
	2 decades, there has been a catastrophic loss of homeownership
	in key cities that have large shares of Black residents.
	When people in Black neighborhoods do own homes, we accrue
	less wealth. Homeowners in disproportionately Black and Latino
	neighborhoods are gaining wealth at about half the speed of
	homeowners in predominantly White neighborhoods.
	One of the reasons is that these homes are devalued. In the
	2018 Brookings report, ``The Devaluation of Assets in Black
	Neighborhoods,'' Jonathan Rothwell, David Harshbarger, and I
	found that, even after accounting for structural
	characteristics such as square footage, age, and number of
	bedrooms, as well as neighborhood characteristics such as crime
	and school quality, homes in Black neighborhoods were valued,
	on average, $48,000 less than they would have been if the
	residents of the neighborhood were mostly White. That is a
	cumulative loss of $156 billion nationwide.
	And we witness viral news stories revealing how appraisers
	value Black and White homeowners differently. In Jacksonville,
	Florida, a mixed-race family looking to sell their home in a
	predominantly White neighborhood received an original appraisal
	of $330,000. After presenting a White owner, a second appraisal
	came in $135,000 higher.
	A similar incident occurred in Denver. Again, after the
	family removed indicators of Blackness, the home increased in
	value by $145,000. In San Francisco, a second appraisal
	increased its value by $500,000.
	``We are here today because we are tired. We are tired of
	paying more for less.''
	These seemingly individual acts of racism are part and
	parcel of a structural problem. The housing market is
	structured to disproportionately exclude Black and Brown
	households.
	For instance, our zoning codes and building practices are
	streamlined to deliver large, single-family homes. My
	colleague, Tracy Loh, and I showed in a recent study that, for
	decades, the very largest houses--four or more bedrooms--have
	grown as a share of all housing inventory, while smaller homes,
	which are more affordable for low-wealth families, have
	stagnated or declined.
	Over 6 million Black and Brown millennials would be
	considered mortgage-ready if there were any attainable homes
	for sale in prime locations.
	Black buyers are subjected to racist steering practices
	when looking for a home. When applying for a loan, Black buyers
	are perceived as higher-risk, leading to more denials and
	higher interest rates.
	Devaluation limits the amount of gain from refinancing. As
	we have heard, bad appraisals also rob families of wealth.
	And all of these housing industry actors blame each other
	for the problem.
	``We are here today because we are tired. We are tired of
	paying more for less.''
	We made individual racism in the housing market illegal,
	and when it finds its way back in, we make a headline. But
	structural racism rigs the game from the start. The root cause
	for these negative trends is structural racism, which is
	systemic. To unlock the potential of Black neighborhoods and
	their residents, systemic racism must be pulled at its roots,
	rather than trimmed neatly, only to grow again.
	Thank you for my time.
	[The prepared statement of Mr. Perry can be found on page
	52 of the appendix.]
	Chairman Green. Thank you, Mr. Perry.
	Ms. Espinoza, you are now recognized for 5 minutes to give
	an oral presentation of your testimony.

	STATEMENT OF FRANCES ESPINOZA, EXECUTIVE DIRECTOR, NORTH TEXAS
	FAIR HOUSING CENTER

	Ms. Espinoza. Thank you, Chairman Green, Ranking Member
	Barr, and subcommittee members.
	The North Texas Fair Housing Center is a nonprofit
	organization that provides fair-housing services to residents
	of north Texas. Our services consist of fair-housing
	counseling, intake, and investigation of housing discrimination
	complaints, and fair-housing education.
	It has been 50 years since the Federal Fair Housing Act
	banned racial discrimination in lending, yet African-American
	and Latino applicants continue to be routinely denied
	conventional mortgage loans at rates far higher than their
	White counterparts.
	In 2011, the North Texas Fair Housing Center did an
	analysis of Home Mortgage Disclosure Act data and found that
	African-American and Latino mortgage applicants were denied
	conventional mortgages at much higher rates than Whites in the
	Dallas-Fort Worth market.
	For example, African-American mortgage applicants to Wells
	Fargo Bank were 57 percent less likely to get a home purchase
	loan when compared to White applicants. Latino mortgage
	applicants to Chase Bank were 64 percent less likely to get a
	loan than were White applicants. Home Mortgage Disclosure Act
	data from 2015 and 2016 confirmed the same pattern.
	One of the most valuable tools we use to investigate
	housing discrimination is testing. Testing allows us to compare
	how applicants of color are treated as compared to their White
	counterparts.
	As part of our enforcement program, we use the results of
	testing as evidence in housing discrimination complaints. We
	file both administrative complaints with the U.S. Department of
	Housing and Urban Development and lawsuits in Federal court.
	The most common form of testing we do is rental testing. In
	2011, we conducted rental testing which showed that African
	Americans who were otherwise qualified encountered
	discrimination in 37 percent of their housing searches. This
	means that African Americans face discrimination in two out of
	every five housing searches.
	The testing also showed that Latinos experienced
	discrimination in 33 percent of their housing searches, or at
	least once in every three housing searches.
	In our most recent enforcement initiative in 2019, we
	conducted tests to measure how veterans with Housing Choice
	Vouchers were treated in the housing market in Dallas, Texas.
	We conducted a total of 35 tests, and the results of 32 of them
	showed evidence of discrimination. We filed housing
	discrimination administrative complaints for all 32 tests.
	The next most common form of testing that we do is sales
	testing. These tests measure how real estate agents treat
	buyers of color as compared to their White counterparts. In
	2018, we conducted sales tests which showed that African-
	American testers are still being steered, based on their race,
	to neighborhoods that are predominantly African-American and
	steered away from neighborhoods that are majority-White.
	Unlike rental and sales testing, mortgage lending testing
	is very resource-intensive. One of the challenges is the
	significant amount of time that testers must devote to each
	test. Unlike rental tests, which can be completed rather
	quickly, lending interviews involve several complex financial
	components, even at the pre-application stage. Testers must
	also be knowledgeable about the entire lending process.
	Rental, sales, and lending testing can all be used to
	uncover practices that lead to segregation of neighborhoods.
	However, there is a particular need to devote resources to
	lending testing because it is so resource-intensive.
	There is also a need for enforcement of complaints based on
	lending testing evidence. Because lending testing cases are
	more complex, they sometimes languish in the administrative
	process. There is a need for a strong entity with an expertise
	in lending discrimination that can take the testing evidence
	generated by local fair-housing organizations and move forward
	with enforcement that will thwart illegal practices.
	Thank you for inviting me. My statement is complete.
	[The prepared statement of Ms. Espinoza can be found on
	page 50 of the appendix.]
	Chairman Green. Thank you very much, Ms. Espinoza.
	Ms. Cooper, you are now recognized for 5 minutes to give an
	oral presentation of your testimony.

	STATEMENT OF CHERYL R. COOPER, ANALYST, FINANCIAL ECONOMICS
	DIVISION, CONGRESSIONAL RESEARCH SERVICE

	Ms. Cooper. Chairman Green, Ranking Member Barr, and
	members of the subcommittee, thank you for the opportunity to
	testify today.
	My name is Cheryl Cooper, and I am an analyst in financial
	economics at the Congressional Research Service (CRS), focusing
	on consumer finance markets and policy issues. For those who
	might be unfamiliar with CRS, our role is to provide objective,
	nonpartisan research and analysis to Congress.
	Any arguments presented in my testimony are for the
	purposes of informing Congress and not to advocate for a
	particular policy outcome.
	My testimony today will focus on disparities in access to
	financial products and services, including racial, ethnic,
	income, age, and geographic disparities. In particular, I will
	focus on discussing disparities in access to banking services
	and disparities in inclusion in the credit reporting system.
	These areas are generally considered foundational for
	households to successfully manage their financial affairs and
	to graduate to wealth-building activities in the future, like
	homeownership.
	Consumers often rely on family or community connections to
	get their first bank account, establish a credit history, and
	gain access to affordable credit. However, research suggests
	that disparities in family wealth or in community relationships
	with financial institutions can potentially persist across
	generations.
	A factor that may be influencing racial disparities is the
	intergenerational effects of discrimination--for example,
	historical mortgage lending practices, redlining practices.
	Moreover, violations in fair-lending laws can cause harm to
	consumers who do not get access to financial services. This is
	important because safe and affordable financial services are an
	important tool for most American households to help them avoid
	financial hardship and build assets over the course of their
	lives.
	According to the FDIC's 2019 survey, over 5 percent of
	households in the United States were unbanked, meaning that
	these households did not have a bank account. In addition, over
	17 percent of households used a nonbank financial transaction
	service, like a money order, a check-cashing, or a bill payment
	service.
	These households are disproportionately of a racial or
	ethnic minority and tend to be lower-income, younger, and have
	less formal education. Urban and rural households are more
	likely to be unbanked, compared to suburban households.
	Unbanked households report that they do not have a bank
	account because they do not have enough money, they don't trust
	banks, they have privacy concerns, and they want to avoid high
	and unpredictable bank fees.
	These disparities in access are significant because some
	research suggests the importance of emergency savings and
	affordable payment transactions. Also, developing a
	relationship with a bank can sometimes lead to access to other
	financial products, helping young consumers develop a credit
	history.
	A limited credit history may serve as a barrier to
	achieving affordable credit, yet consumers also can't develop a
	credit history without access to credit products. This chicken-
	and-egg situation can make it difficult for some people to
	enter the credit reporting system.
	According to the CFPB, credit scores can't be generated for
	approximately 20 percent of the U.S. population due to their
	limited credit histories. Limited credit history is correlated
	with age, income, race, and ethnicity. Many of these consumers
	are young. For example, 40 percent of credit invisibles are
	under 25-years-old. These consumers are disproportionately
	Black or Latino and live in lower-income or rural
	neighborhoods.
	Most young adults transition into the credit reporting
	system in their early twenties. Young adults in lower-income
	and rural neighborhoods tend to make the transition to credit
	visibility at older ages than young adults in higher-income
	areas. And, notably, in lower-income communities, it is less
	common to enter the credit reporting system through what is
	called, ``piggybacking,'' or becoming a joint account holder or
	authorized user on another person's account, such as a parent's
	account.
	The disparities in inclusion to the credit reporting system
	are significant because it is generally a precursor to gain
	access to affordable credit and eventually to homeownership.
	Thank you for your time, and I am happy to answer any
	questions that you have.
	[The prepared statement of Ms. Cooper can be found on page
	32 of the appendix.]
	Chairman Green. Thank you very much, Ms. Cooper.
	The Chair will now recognize Members for questions.
	The gentleman from Missouri, Mr. Cleaver, who is also the
	Chair of our Subcommittee on Housing, Community Development,
	and Insurance, is now recognized for 5 minutes.
	Mr. Cleaver. Thank you, Mr. Chairman. I appreciate this
	opportunity. And I think this is exactly the kind of hearing
	that we need, so thank you.
	Where I would like to center my discussion, my questions,
	is on the fact that the current Federal public policies operate
	to perpetuate or expand the racial wealth gap.
	So, I would like to ask any of the panelists, are there
	Federal public policies that actually contribute to the
	exclusion of African Americans, Brown people, people of color?
	And what impact does it have on the wealth gap? I am talking
	about Federal policies.
	Mr. Perry. I will take a stab at that.
	One of the things I am noticing is that current legislation
	does not address wealth in this country. We measure almost
	everything by income. And by doing so, you essentially abdicate
	responsibilities of dealing with the structures that created
	the gaps in the first place. In many different systems--
	housing, education, and other areas--if you don't address the
	wealth gap, you essentially gloss over the problem.
	In addition, we also have a race and space problem. Because
	racist policies have followed Black people, we see
	discrimination in rural communities, in urban communities, in
	suburbs. And, for my take, it is hard to not have a race and
	place approach to change.
	And so, for me, it is not necessarily what the Federal
	Government is doing; it is what the Federal Government is not
	doing, not measuring, not testing. Because we have ample data
	that shows the impact of our policies, but what we have not
	done is really get at the reasons, the causes for these
	disparities.
	Mr. Cleaver. Yes. I think you are making a case for the
	increase of the minimum wage, and I think that is going to--
	that is a debate we are having right now.
	Ms. Rice. Congressman, if I can add to that, too, there are
	a lot of policies that perpetuate racial disparity. So, in
	terms of Federal policies: the recently promulgated cap rule
	that was promulgated by the Federal Housing Finance Agency; the
	GSE LLPA structure, the loan-level pricing adjustment
	structure, discriminates against communities of color; the
	current Affirmatively Furthering Fair Housing rule that was
	promulgated several months ago by the Department of Housing and
	Urban Development, which really eviscerates our civil rights
	rules; and the current Disparate Impact rule that was
	promulgated by the Department of Housing and Urban Development
	several months ago, which also eviscerates a major civil rights
	tool that we have for addressing discriminatory policies.
	So, there are many, many Federal policies that right now,
	work to perpetuate discriminatory outcomes.
	Mr. Cleaver. Thank you.
	I think my time is running down, so I appreciate both you
	and Mr. Perry for your comments. Thank you.
	Chairman Green. The gentleman yields back.
	The Chair now recognizes the ranking member of the
	subcommittee, Mr. Barr, for 5 minutes.
	Mr. Barr. Thank you, Mr. Chairman.
	Last year, I introduced H.R. 8410, the Promoting Access to
	Capital in Underbanked Communities Act, which is designed to
	spur de novo bank formation and promote banking services in
	underserved areas.
	The bill would ease the up-front burden of opening a bank,
	and provide incentives for banks to open and operate in rural
	areas. The bill is intended to address the problem of deeply
	affected counties that I referenced in my opening statement,
	which have lost a large portion of their bank branches.
	Ms. Cooper, how have bank closures in rural communities
	impacted customers living in those areas? What long-term issues
	will arise if rural communities continue to face an
	unprecedented number of bank closures? And we anticipate that,
	given the trend of bank consolidation. Could a bill like the
	one I just referenced, designed to promote more banking
	activity in rural and otherwise underserved areas, help with
	those problems?
	Ms. Cooper. Thank you so much for your question,
	Congressman.
	As I mentioned in my oral statement, there are geographic
	disparities that exist in terms of access to financial
	products. And as you mentioned and I mentioned, research
	suggests that, for consumers living in rural areas, these
	consumers may be living farther from bank branches or also may
	be less likely to have access to high-speed internet, and both
	of these factors could possibly make it more difficult for
	consumers to access quality banking services.
	We at CRS don't advocate for a particular policy outcome,
	but I would be happy, after this hearing, to look at the bill
	with some of my CRS colleagues.
	Also, in general, around trends in terms of consolidation
	in the banking industry, this has been happening for decades.
	We have seen a reduction in community banks for the past few
	decades, particularly a reduction in bank branch openings in
	the past decade.
	And there are a lot of different factors that are leading
	to this trend. In general, economists would say that you are
	starting to see economies of scale, which basically means that
	big banks are becoming more profitable than smaller banks to
	operate. And that is probably part of the reason why we are
	seeing this consolidation in the banking industry.
	Mr. Barr. Ms. Cooper, I did see, though--and I respect that
	CRS doesn't make policy endorsements, but I did see in your
	testimony, in the, ``Possible Policy Responses'' section,
	``Bank Regulation Changes,'' that you mentioned the Community
	Reinvestment Act (CRA). And I think, for our friends and
	neighbors in underserved parts of our country in both urban and
	rural areas, this is something that I think would be welcome,
	to give banks more credit for bank account outreach activities
	in those underserved areas.
	Do you have any specifics on that? We saw an effort by the
	OCC, and Lael Brainard at the Federal Reserve, to update the
	CRA, but how can we give incumbent banks and new banks in these
	underserved areas credit for originating loans under the CRA?
	Ms. Cooper. Yes. Thank you so much for that question.
	You are right, one of the things that I mentioned in terms
	of possible policy options for expanding access to credit was
	possible proposed changes to bank regulation. So, this is one
	of the areas where we see proposals on this.
	For example, I know the bank regulators have stated that
	they were considering changes to the Community Reinvestment Act
	to give banks more credit for bank account outreach activities
	in underserved communities. But I think there are trade-offs to
	these type of policies.
	The positive, as you were saying, is that it can encourage
	bank outreach and connect more consumers to banks. But I think
	the flip side to it is, also, it could give credit for what
	some may consider effectively marketing, rather than the
	intention of the law, which was to encourage lending in
	underserved communities.
	Mr. Barr. Thank you.
	Ms. Cooper. This is an area where there--
	Mr. Barr. Thank you.
	And just reclaiming my time, in the final time I have, how
	is compliance under the Equal Credit Opportunity Act currently
	tested? And is there any indication that the testing regime
	needs to be strengthened? Or do regulators currently have
	enough authority to enforce that law?
	And that is again to you, Ms. Cooper.
	Ms. Cooper. Yes. Thank you so much for that question. And
	we are running out of time, so let me get back to you with
	that. I am happy to answer that question with one of my CRS
	colleagues.
	Mr. Barr. Mr. Chairman, my time has expired, and I know
	that is a subject or a topic that is part of your legislation,
	so I invite any or all of the witnesses to comment on that and
	how we can make sure the ECOA is tested.
	With that, I yield back.
	Chairman Green. The gentleman's time has expired. And the
	witness may respond in writing to the gentleman's question.
	The Chair will now recognize Ms. Adams, the gentlelady from
	North Carolina.
	Ms. Adams. Thank you, Mr. Chairman.
	And thank you to our witnesses for your testimony today.
	Mr. Darity and Mr. Perry, you have both have done extensive
	research and writing on economic and racial inequity in the
	United States. In today's hearing, we focus primarily on how
	lending discrimination harms individual borrowers of color, but
	I am curious to hear your thoughts on how the same dynamics,
	primarily racism, also impact institutions of color, such as
	Historically Black Colleges and Universities (HBCUs).
	In December of 2019, a study in the Journal of Financial
	Economics found that HBCUs pay higher underwriting fees to
	issue tax-exempt bonds compared with similar non-HBCUs,
	apparently reflecting higher costs of finding willing buyers.
	The effect is 3 times larger in the Deep South, where racial
	animus remains the most severe.
	For example, identical fee differences are observed between
	HBCUs and non-HBCUs with triple-A ratings or when insured by
	the same company, even before the 2007-2009 financial crisis.
	HBCU-issued bonds are also more expensive to trade in secondary
	markets and, when they do, sit in inventory longer.
	So are you familiar with this type of institutional lending
	discrimination? And what policy steps can we take to collect
	more data on the prevalence of this issue and ultimately to
	eradicate this type of harmful discrimination in lending for
	institutions that have been historically underserved and
	undervalued?
	Mr. Darity. It is my impression that this is a serious
	problem, but I think it is compounded or generated by the fact
	that Historically Black Colleges and Universities have such low
	endowment levels that they are then pressured to go into the
	credit market, a discriminatory credit market, to gain
	resources.
	Another way to think about improving their circumstances is
	something that I think is applicable to individual households
	as well, which is, we need to build the wealth position of
	those institutions in such a way that they don't have the same
	type of pressure to seek predatory lending options to try to
	maintain their operations.
	And we should think about how we could go about building
	the endowments of Historically Black Colleges and Universities
	so that they are comparable to the endowment levels that exist
	for White institutions in the United States. That is where we
	have a very glaring and dramatic difference.
	In addition, of course, I think that we do have to confront
	these kinds of discriminatory practices. And it may be
	necessary for the Federal Government to take the step of
	providing public banking services in competition with the
	private sector to offset the types of behavior that we are
	observing that the private sector is undertaking.
	And one final comment in this context. I said that this
	parallels the conditions that we observe for households,
	because the reason why households are pushed into trying to
	seek high levels of credit under very, very difficult
	circumstances, discriminatory circumstances, is, again, because
	their initial levels of wealth are so low. So, again, I would
	say, we have to think about asset building in addition to
	trying to improve credit market conditions.
	Ms. Adams. Thank you, sir.
	Mr. Perry, did you want to comment?
	Mr. Perry. I think Mr. Darity said everything I was going
	to say. In a nutshell, I think Black institutions are treated
	like Black people. And you have school boards and universities
	that, because of their wealth position, have to take
	essentially subprime market products, for all of the reasons
	that Mr. Darity indicated.
	But I will just leave it there.
	Ms. Adams. Okay. Thank you, sir.
	Let me move on quickly. Ms. Rice, Ms. Espinoza, just how
	pervasive is lending discrimination in the United States? Is it
	widescale, or is it just a small problem?
	Ms. Rice?
	Ms. Rice. Sure. I am happy to answer that.
	Yes, it is very widescale, especially when you consider,
	Congresswoman Adams, that almost all of the technologies that
	we use in the lending space--automated underwriting systems,
	risk-based pricing systems and credit scoring systems--
	discriminate against consumers of color and other underserved
	groups.
	So the discrimination is very prevalent, which is why we
	have to really work to de-bias all of these technologies that
	we are using in the housing and financial services space.
	Ms. Adams. Okay. Is the answer--
	Chairman Green. The gentlelady's time has expired.
	Ms. Adams. Okay. Thank you very much, and, Mr. Chairman, I
	yield back.
	Chairman Green. The gentlelady's question can be answered
	in writing.
	Ms. Adams. Great. Thank you.
	Chairman Green. The gentleman from Georgia, Mr. Loudermilk,
	is now recognized for 5 minutes.
	Mr. Loudermilk. Thank you, Mr. Chairman.
	As I was preparing for this hearing, I was trying to think
	of ways that we as policymakers can help the minority
	communities have more access to financial services and wealth
	building. One thing that immediately came to mind, which is
	something that I have been working on for a long time, is
	fintech.
	In recent years, developments in the financial technology
	arena have made enormous strides toward giving minority
	consumers access to the banking system. Let me just go through
	a few of these.
	The first is mobile banking. It makes it easier than ever
	to open a checking account without having to go into a bank
	branch.
	The second is online lending. It uses fintech platforms and
	even incorporates artificial intelligence in underwriting and
	has expanded access to credit to millions of consumers who were
	credit-invisible and didn't qualify for a traditional bank
	loan.
	Prepaid cards are another. They have enabled consumers who
	do not have credit or debit cards to access e-commerce.
	And the list goes on and on.
	And it is not just in consumer finance. A recent study by
	New York University showed that fintech companies are by far
	the number-one source of Paycheck Protection Program (PPP)
	loans for Black-owned small businesses, exceeding Minority
	Depository Institutions (MDIs) and Community Development
	Financial Institutions (CDFIs). Fintechs have also been the
	number-one source of PPP lending to Hispanic-owned businesses.
	As a result of this, I offered an amendment at this
	committee's markup of the stimulus bill that would allow
	fintech companies to participate in the State Small Business
	Credit Initiative (SSBCI). Unfortunately, it was rejected by
	the Majority. I would just say, if my colleagues are interested
	in improving access to financial services for minority
	consumers, I would suggest embracing fintech instead of
	opposing it.
	Ms. Cooper, in your testimony, you said that new technology
	can provide more affordable financial products to consumers.
	Can you discuss how fintech has expanded access to credit for
	minority consumers?
	Ms. Cooper. Thank you so much for that question,
	Congressman.
	So, yes, as you just stated, I think new technology could
	potentially provide more affordable financial products to
	underserved communities, but it also could introduce consumer
	protection risks as well.
	And this is similar to what you were saying. One example of
	this, for example, would be internet-based or mobile financial
	products, which, for example, could lower the cost to provide
	payment services or other types of products, but these types of
	products could have, for example, cybersecurity or privacy
	risks as well.
	So, I think there is always a trade-off there when you are
	thinking about this stuff.
	Mr. Loudermilk. Thank you for that, and I appreciate it.
	On another note, because of these developments and what you
	have laid out, data security and data privacy laws, I think,
	need to be updated, and we need a uniform national standard. Do
	you have any thoughts on that?
	Ms. Cooper. No. In general, I would say that CRS does not
	advocate for any particular policy outcome. And I personally am
	not the one at CRS who covers those issues, but I would be
	happy to put you in touch with the CRS analyst who does, to
	work with you and your staffers.
	Mr. Loudermilk. I appreciate that.
	And as we continue to hopefully promote fintech, since it
	is very beneficial in underserved areas of our nation and
	underserved demographics, we do have to address some
	limitations, which could be the data security, because we are
	looking at more than 50 different standards with which we have
	to deal.
	So, I appreciate the time here, Mr. Chairman, and I yield
	back.
	Chairman Green. The gentleman yields back.
	The Chair now recognizes the gentlelady from Michigan, Ms.
	Tlaib, for 5 minutes.
	Ms. Tlaib. Thank you, Mr. Chairman.
	And thank you all so much for being with us.
	As we all know, despite decades of civil rights laws on the
	books, Black homeownership is plunging across the nation, with
	the worst losses happening right here in Michigan. Detroit has
	seen a dramatic shift from a city of homeowners where Black
	family members could build intergenerational wealth to, now, a
	city of renters. And the predatory lenders on Wall Street who
	crashed the economy in 2007-2008, as we know, got bailed out,
	while many of my residents got foreclosed on by the thousands.
	Redlining never ended in Detroit. In 2019, in a city of
	more than 650,000 people, there were only 1,535 mortgages
	issued. And that is up from 2012, when we only had 244
	mortgages that were reported. When mortgages are issued in
	Detroit, they go towards those who are White borrowers, who are
	a small minority of the population.
	And so, unwillingness of banks to lend in Detroit and other
	majority-Black communities pushes our residents into riskier
	arrangements, like land contracts, which offer opportunities
	but also fewer protections and have been abused by predatory
	sellers.
	Ms. Rice, we know banks aren't drawing red lines on a map
	anymore but that discrimination still persists. Can you
	describe some of the tactics and technology that lenders use
	now to perpetuate racial redlining?
	Ms. Rice. Sure. Thank you so much for that question, and it
	is a critically important issue.
	I am from Toledo, Ohio, and so I am very familiar with the
	Detroit market and other markets like it. One major problem
	that we have in cities like Detroit is that a lot of the
	housing stock is very affordable and is priced under $100,000.
	And, for a variety of reasons, it is extremely difficult in
	today's marketplace for consumers to access mortgage credit in
	the financial mainstream when you are trying to get what we
	call a smaller-dollar loan.
	The qualified mortgage rule, coupled with the LLPAs from
	the GSEs, coupled with other Federal policies, really restrict
	credit access for more affordable loans. So, that is a major
	problem.
	The other problem is the industry's overreliance on credit
	scores. Back when I was underwriting mortgages years ago, two
	of the key things that I relied on to determine a borrower's
	creditworthiness were: What are your current housing payments?
	Have you been paying your rent on time? And if you have been
	paying your current housing bill on time, you are a very good
	candidate. And, also, what is your housing payment shock? So,
	is the new mortgage that you are going to be paying appreciably
	different from the housing payment that you have been used to
	making? And if you have been paying your rent on time, and if
	there is really no housing payment shock, you are a very good
	candidate for getting credit.
	But we don't use those two indicators anymore. Today, we
	overrely on algorithmic-based systems, like credit scores,
	automated underwriting systems, that don't include those kind
	of indicators.
	And you heard one of the other panelists already testify
	that consumers of color are disproportionately credit
	invisible. So, just the systems that we have in place in order
	to give people an entrance into the financial mainstream are
	blocking folks out because those systems do not work for
	underserved communities.
	Ms. Tlaib. Thank you, Ms. Rice.
	I am not sure how much time I have, but I just want folks
	on the panel and just the public to notice that none of this
	discrimination that we are talking about today is explicitly
	spelled out in some sort of company handbook, but it is all
	implicit and cloaked in, like, proxies and codewords and
	misguided assumptions. And its effect, regardless of the
	intent, is to disproportionately deny homeownership
	opportunities to Black and Brown folks.
	We have the tools to fight it. Just last year, though,
	unfortunately, President Trump struck a huge blow to fair-
	housing protection with this disparate impact final rule which
	failed to comply with the Supreme Court's Inclusive Communities
	decision. And we need to address that, Mr. Chairman.
	We also know that, as recently as 2015, the Supreme Court
	recognized the continuing availability of disparate impact
	litigation on the Fair Housing Act. We need to restore these
	protections. They are getting watered down by conservative
	courts and decisions. And so, I just hope our subcommittee can
	proceed and be very intentional about addressing this
	discrimination that leaves a lot of my residents out of
	opportunities for economic stability.
	Thank you, and I yield back.
	Chairman Green. The gentlelady's time has expired.
	We will now hear from Mr. Mooney from West Virginia for 5
	minutes, and then, we will take our break. So if you are after
	Mr. Mooney, you might want to go cast your vote now. And we
	will cast our second vote as well. That is two votes before we
	return.
	So, please, now, Mr. Mooney, you are now recognized for 5
	minutes.
	Mr. Mooney. Thank you, Mr. Chairman.
	My concerns are going to address access to rural banking,
	generally speaking. And I am going to direct a question to Ms.
	Cooper. But I want to highlight some of the concerns related to
	getting my constituents in rural West Virginia, and others,
	access to loans, credit, and banking, any and all banking
	services in general.
	According to a survey by the FDIC, 7.8 percent of West
	Virginia households are unbanked. This puts West Virginia in
	the bottom 10 in the nation in terms of unbanked households.
	Ms. Cooper, what can we do to help rural Americans get
	access to credit and basic financial services?
	And just as a quick follow-up to that, after you answer
	that one, how do you feel the COVID-19 pandemic has affected
	efforts to reach the unbanked?
	Ms. Cooper. Thank you so much for your questions,
	Congressman.
	So, yes, in general, I know we have already spoken about
	this, and in my oral and written statements I have mentioned,
	kind of, the geographic disparity, the fact that research
	suggests consumers living in rural areas may be living farther
	from bank branches, and are less likely to have access to high-
	speed internet, and these reasons might make it more difficult
	for them to access quality banking services.
	In general, in my written testimony, I talk about some
	policy options that are often discussed in this space just
	generally to increase access to credit to consumers.
	And there are five broad types of policy approaches in this
	space: first, possible changes to bank regulation to further
	encourage banks to serve underserved communities; second,
	payment system improvements that may make bank products more
	attractive; third, financial technologies to potentially
	increase access to consumers; fourth, the government directly
	providing certain financial products directly to consumers; and
	fifth, financial education programs.
	And I would say, in terms of all of these policy options,
	they all have costs and benefits and potential unintended
	impacts and risks, but they are all things that could be
	potential places to explore in this space if you are interested
	in expanding access to credit.
	Thank you so much. And then your second question was around
	the COVID-19 pandemic? Is that correct?
	Mr. Mooney. That is correct, how you feel that affects
	efforts to reach the unbanked?
	Ms. Cooper. Yes. Thank you so much for that question.
	I am actually not aware of that much data, since the COVID-
	19 pandemic is something that has happened in this past year,
	and the FDIC's survey that they do regularly was most recently
	done in 2019.
	But, yes, I think at least at the beginning of the
	pandemic, there were a lot of reports of more people accessing
	banking services online, given the pandemic. That pattern makes
	sense. So, I do think that is an interesting trend in this
	space.
	Mr. Mooney. Okay.
	Thank you, Mr. Chairman. I yield back.
	Chairman Green. The gentleman yields back.
	At this time, we will stand in recess for the Members to
	cast two votes and then return.
	[brief recess]
	Chairman Green. Thank you, everyone, for your patience,
	especially our witnesses. Thank you so much. It is not unusual
	for Members to have to rush out and vote, and we try to do it
	as expeditiously as possible, because we know that your time is
	very valuable
	Let me just see if Mr. Garcia of Illinois is present.
	Mr. Garcia, are you with us? If so, I will yield 5 minutes
	to you for your questions.
	We will stand in recess for a bit longer. We are awaiting
	the arrival of our ranking member and additional members, so
	please be a little bit patient with us. Thank you so much.
	[brief recess]
	Chairman Green. Friends, just to give you a quick update,
	we are not waiting on Mr. Garcia, so that you won't think that
	we are. We are waiting on our ranking member, Mr. Barr. I
	assume that he will be arriving shortly, so please continue to
	be patient with us while we await his arrival.
	Mr. Garcia of Illinois. And Mr. Garcia is on standby, Mr.
	Chairman.
	Chairman Green. Yes, sir. I have noted that you are here.
	As soon as Mr. Barr arrives, we will come right to you. Thank
	you so much, Mr. Garcia.
	Friends, if I may have your attention, please, the hearing
	will now return to order.
	We will continue with questions. And next in order for
	questions will be Mr. Garcia of Illinois. Mr. Garcia, you are
	recognized for 5 minutes to ask your questions.
	Mr. Garcia of Illinois. Thank you so much, Mr. Chairman,
	for convening this important meeting.
	When we talk about wealth in this country and opportunities
	to build wealth, we have to talk about housing. So when I think
	about the wealth gap, I think about neighborhoods like mine. I
	represent a working class, mostly Latino community in Chicago.
	I have lived here for more than 50 years. Most of my
	constituents are renters, and the housing crisis they are
	facing now under COVID-19 isn't new.
	My neighbors are squeezed. On the one hand, our community
	can't get the investment they need. On the other hand, working-
	class Latino and Black people are being pushed out of their own
	neighborhoods by wealthier White residents who do have access
	to capital. So, I am glad to talk with you today to learn more
	about what is driving that and what we can do to support
	working-class communities and communities of color especially.
	I thank all of the witnesses for being here.
	I would like to ask Ms. Espinoza a question on bank
	mergers. This country had 12,000 banks in 1990, and now it has
	fewer than 5,000. The Fed and the Department of Justice rubber-
	stamped bank merger applications without a second thought, even
	though mergers can often close down local bank branches and
	leave communities underserved.
	Do you find that consolidation in the banking industry has
	a negative impact on marginalized communities, and does it hurt
	access to credit in communities like mine?
	Ms. Espinoza. It does hurt access to credit, and one of the
	things that we have seen here with the bank mergers is that the
	Community Reinvestment Act (CRA) requirements don't change when
	banks merge. Instead of them having to do twice the amount, for
	example, by merging, they are actually having to do less under
	the CRA. So, it is definitely hurting people, and it hurts
	people of color because as they merge, they seem to close down
	branches in minority neighborhoods that are predominantly
	African American and Latino.
	Mr. Garcia of Illinois. Okay. Thank you.
	Mr. Perry, in your testimony, you mentioned recent high-
	profile instances of the appraisal gap, that is, when a
	family's home is appraised at a low value because of racial
	discrimination. This is a huge problem in my City of Chicago.
	Could you talk a little bit more about how the appraisal
	gap hurts communities that have always had a hard time getting
	loans, and what can Congress and housing advocates do to get
	help?
	Mr. Perry. Yes, that is a difficult one, because Congress
	does not authorize appraisals. However, there are some key
	areas that we know are at fault. We know that the price
	comparison model in which homes are compared to other homes in
	similar neighborhoods essentially recycles racism, because if
	you are essentially measuring homes against other homes that
	have been impacted by discrimination, you really never get a
	sense of values.
	The other area that is clear that home improvements are not
	treated the same in Black and Brown communities as they are in
	White communities, and we see that time and time again.
	And there is one other area, and this is the area--the
	Dodd-Frank Act created an arm's-length relationship between
	appraisers and lenders, and it seems that in some communities,
	it is very strict, where lenders and appraisers don't talk at
	all, and it results in loans falling through, where in White
	communities, there seems to be enough communication to come to
	an agreed-upon price. And so those are the three areas where I
	see of some of the biggest problems.
	Mr. Garcia of Illinois. Thank you very much.
	Mr. Chairman, I don't have any more questions at this time.
	I have to go vote.
	Chairman Green. The gentleman yields back. Thank you, Mr.
	Garcia.
	The Chair now recognizes the vice ranking member, Mr.
	Timmons from South Carolina, for 5 minutes.
	Mr. Timmons. Thank you, Mr. Chairman.
	Ms. Cooper, since the 1990s, the median wealth among
	minority families has plateaued, while it has increased roughly
	50 percent for White families. This is a huge problem, as White
	families on average now have 41 times the wealth of Black
	families and 22 times the wealth of Latino families. I think we
	can all agree that that is a major problem.
	A friend of mine, who is Black, explained it to me in a way
	that really stuck with me. He said, imagine a game of monopoly.
	Certain families have been playing for generations. They have
	been passing go, collecting $200. They have been purchasing
	property, building houses, building hotels, buying the
	railroads, and certain families have started much later. And it
	is challenging to play the game, it is challenging to compete,
	it is challenging to have a chance when you are faced with
	those kind of odds.
	So, a racial wealth gap has always been an issue. But why
	has it gotten worse over the last few decades, and does it have
	anything to do with lending practices of financial
	institutions?
	Ms. Cooper. Thanks for that question. As I was saying in my
	oral testimony, as you were describing, research suggests that
	disparities in family wealth or in community relationships with
	financial institutions can potentially persist across
	generations. For example, from parents to children, influencing
	children's financial outcomes, so, for example, children's
	credit history or homeownership status. And in this way, past
	discrimination can cause intergenerational effects, and as I
	described, these disparities exist in terms of access to
	financial products.
	I will say in general, I am not aware of research around
	increases or decreases in some of these disparities. Over time,
	a lot of this research, particularly around intergenerational
	effects, is relatively new. But I would be happy to do some
	more research on that question and get back to you.
	Mr. Timmons. Thank you.
	Mr. Darity. I would like to comment on this, if I may, to
	say that the widening gap that we have observed is in part
	attributable to the adverse effects of the Great Recession, but
	more significantly is due to the cumulative nature of wealth
	accumulation and decumulation across generations. That is to
	say, wealth begets wealth and lack of wealth begets lack of
	wealth.
	And so communities that have been subjected to denial and
	deprivation have less of an opportunity to transfer resources
	across generations and, therefore, we observe a widening gap
	over the course of time. It is a fact that is associated with
	the very way in which people acquire additional assets.
	Mr. Timmons. Sure. And, Mr. Darity, let me follow up on
	that. I appreciate you jumping in.
	Mr. Darity. Yes.
	Mr. Timmons. Would you agree that it is a worthy endeavor
	to try to find ways to give people opportunities, who have not
	had opportunities in the past, without necessarily putting
	people who do not fall into that category at a disadvantage?
	I am in the military. I am in the South Carolina Air
	National Guard, and we talk a lot about these issues, and the
	question becomes, not everyone is in the same box, and if you
	are going to try to give people opportunities who have not had
	opportunities in the past, that is a worthy endeavor, and I
	actually support that. My concern is that there are people who
	would be lumped in with the people who theoretically have had
	opportunities, who really haven't had opportunities.
	So while we look at these statistics, and I agree they are
	actually quite terrible and we need to take steps, the question
	is, if someone is not necessarily in the bucket of, wealth
	begets wealth, they are struggling just like anyone else, how
	do we not disadvantage that person? Does that question make
	sense to you, sir?
	Mr. Darity. It makes sense to me, but I think that we have
	to recognize that those differences in opportunity historically
	have been racialized to the point that Whites who are in the
	bottom 20 percent of the income distribution have a higher
	median level of wealth than all Black Americans taken together.
	And so, I would argue that there is a racial differential that
	needs to be addressed.
	Mr. Timmons. And I will do everything I can to help address
	that, because I do agree with you, in large part.
	And I guess my next question is, would you segment out--
	Chairman Green. The gentleman's time has expired. Excuse
	me. I'm sorry.
	Mr. Timmons. Oh, I will yield back, Mr. Chairman. Thank
	you.
	Chairman Green. Okay. Because we are trying to end before
	this next vote. The gentleman's time has expired.
	And we will move on now to Ms. Garcia of Texas. You are now
	recognized for 5 minutes.
	Ms. Garcia of Texas. Thank you, Mr. Chairman, and thank you
	so much for hosting this hearing.
	And thank you to all of the witnesses. And most of all,
	thank you for your patience as we struggle through these votes.
	I want to start with Ms. Rice. Ms. Rice, the Center for
	Investigative Reporting report revealed that out of 31 million
	Home Mortgage Disclosure Act records, that modern-day redlining
	still exists in 61 metro areas in our country. As compared to
	White borrowers, lenders denied African-American borrowers in
	significantly higher rates in 48 cities, Latinos in 25 cities,
	Asian Americans in 9 cities, and Native Americans in 3 cities.
	Still, 98 percent of the banks nationally received a
	passing grade in the Community Reinvestment Act examination.
	What is wrong here? Do you think that we need to redo how we
	grade for the Community Reinvestment Act, and would moving from
	a pass/fail system to a more transparent letter grade be
	better?
	Ms. Rice. Thank you so much, Congresswoman Garcia, for that
	question. One of the challenges that we face with the Community
	Reinvestment Act and the CRA examinations is that it is not
	automatically a given that if there are fair-lending violations
	at a financial institution, that it will translate into a lower
	score for the financial institution.
	And so, oftentimes, fair-lending violations are not even
	considered in terms of being reflected in the ultimate score
	for the financial institution. And that is why you have seen,
	since 1977, when the Community Reinvestment Act was enacted,
	multiple examples over and over again of financial institutions
	who have been found to violate the Fair Housing Act, they have
	been found to have engaged in discrimination, and received an
	outstanding CRA grade.
	Part of that is because CRA is tied to income. The
	Community Reinvestment Act says that lenders are supposed to be
	meeting the credit needs of their entire delineated community,
	including low-income areas. And it just depends on the guidance
	at the regulatory agencies at the particular time, but for some
	reason, the part that says that the banks are supposed to meet
	the credit needs of their entire community--somehow,
	communities of color don't get picked up in that definition.
	Ms. Garcia of Texas. Should we look at other punishment, if
	you will? Should we look at criminal sanctions for intentional
	discrimination by the landlords, the builders, the mortgage
	companies?
	Ms. Rice. We can certainly look at that, whether or not
	there should be criminal violations. But I think one of the
	first steps that should be taken is we should add race as a
	consideration explicitly in the Community Reinvestment Act, so
	it makes it clear that lenders cannot redline communities of
	color, they cannot avoid serving communities of color in order
	to get the higher grades in the CRA designations.
	And also, lenders should be required to include communities
	of color in their service area. In other words, you shouldn't
	be able to carve out neighborhoods of color when you are
	designating what is your service area.
	Ms. Garcia of Texas. Okay. But as my colleague, Ms. Tlaib,
	mentioned, nobody goes around and says, ``Okay neighborhood A,
	you are being redlined.'' It is a lot more subtle. And with
	algorithms and the technology that is being used now, it is
	hard to find, and it is hard to find the appropriate
	enforcement tool. But thank you for that.
	And I wanted to ask quickly, Ms. Espinoza, because I know I
	am running out of time, you mentioned the three different kinds
	of testing that you all do and look at. I think you said there
	was rental testing, self testing, and mortgage testing. How
	complicated is that, and about how much money do you all need
	for more testing so that we can more easily prove some of these
	cases?
	Ms. Espinoza. Well--
	Chairman Green. If I may, Ms. Espinoza, the gentlelady's
	time has expired, and we are trying to get back for the next
	vote.
	Ms. Espinoza. Oh, okay. I can address that in writing.
	Ms. Garcia of Texas. Thank you, Ms. Espinoza.
	I yield back, Mr. Chairman. I apologize.
	Chairman Green. That is quite all right. We are trying to
	get to everybody.
	We will now go to Ms. Williams from Georgia for 5 minutes.
	And my apologies to everyone, but we do want to finish before
	the next vote.
	Ms. Williams of Georgia. Thank you, Chairman Green, and
	thank you for convening this hearing today.
	In my district and across the country, we see racial wealth
	disparities brought on by barriers like invidious
	discrimination. In 2019, the median wealth in Black households
	was about $24,000, compared to $188,000 for White households,
	with the gaps sure to continue to widen because of the
	disproportionate impact of COVID-19.
	I have an obligation in Congress to work to break down
	these barriers and ensure communities of color have a fair
	chance to buy homes, start their own businesses, and even send
	their kids to college without taking on the massive debt that I
	have had to incur. When fewer of us face barriers to building
	wealth and long-term prosperity, the better off our economy,
	our communities, and our people will be.
	Professor Darity, student debt certainly stands in the way
	of closing the racial wealth gap, but in your testimony, you
	mention that there are some limitations to focusing exclusively
	on debt reduction. What are some next steps that we should
	consider from an asset-building perspective to lessen the
	financial burden of things like going to college for
	communities of color?
	Mr. Darity. Historically, the United States has practiced
	asset-building policies. Representative of these are the 19th
	Century policies that involved land allocation. In the 20th
	Century, the policies were focused primarily on supporting
	homeownership.
	I would argue, though, that since the 1960s, the entire
	emphasis of Federal policy has been on income supports rather
	than wealth building or asset building. And so, if we are
	really concerned about improving opportunities for all
	Americans to engage in the widest range of opportunities, there
	needs to be a shift back towards asset-building opportunities.
	And I would think that if we are thinking about individuals
	having an opportunity to go to college and to leave college on
	a debt-free basis, either we have to eliminate the expense of
	attending college altogether, as some people have advocated
	zero tuition for attending State universities. I think that is
	an idea that should be explored.
	But on the other hand, I think that we tend to think about
	education as driving wealth, but we really should think about
	wealth as driving educational achievement. So, if we could
	alter the foundation for assets that are held by a large number
	of wealth-poor families in the United States, we would create
	greater opportunities for their kids to go further in school
	and not have to do so on the basis of the acquisition of
	extraordinary levels of indebtedness.
	Mr. Perry. And, Representative Williams, I just wanted to
	add that there are a number of innovative products going on
	right now which are enabling people to get a mortgage and
	cancel a student loan debt at the same time, and I think those
	are the kind of products we need to see in communities.
	Ms. Williams of Georgia. Thank you so much.
	And, Professor Darity, I appreciate that.
	Ms. Rice, I do have a quick question for you. As we have
	heard today, we must break down the discriminatory barriers to
	things like owning a home if we really want to close the racial
	wealth gap. In your testimony, you offered some suggestions to
	increase diversity in the real estate industry. Do you have any
	additional recommendations for increasing diversity in other
	parts of the financial services industry that impact how
	communities of color access housing?
	Ms. Rice. Yes, absolutely. One of the first things we have
	to do is break down barriers to credit access and the
	overreliance on things like credit scores. Credit scores are a
	major factor that preclude people of color from being able to
	access financial services. People of color disproportionately
	live in credit deserts. They also disproportionately live in
	communities where there is a hyper concentration of
	nontraditional financial services providers who do not report
	positive behavior to the credit repositories.
	So, that is a huge thing that we need to break down, and we
	can actually use new artificially intelligent tools in order to
	do that. But we do need more support from regulators and
	Congress in order to onboard those new debiasing, tech
	debiasing methodologies so that we can expand opportunities for
	people.
	Ms. Williams of Georgia. Thank you.
	Ms. Cooper. And I will just--
	Ms. Williams of Georgia. We are out of time, because we
	only get 5 minutes, but I appreciate everyone being here today.
	And I look forward to working with everyone on the subcommittee
	as we continue to address these disparities.
	Thank you, Mr. Chairman. I yield back the balance of my
	time.
	Chairman Green. And thank you very much for being a little
	bit conscious of the time. I greatly appreciate it.
	Let me move expeditiously and yield myself 5 minutes, so
	that we may quickly get to the next vote.
	I was here in 2008 when we had the downturn in the economy,
	and one of the questions that we asked quite consistently was,
	would anyone go to jail for the predatory lending that took
	place? The answer to the question is, yes, someone did: one
	person. One person went to jail for that long line of predatory
	lending that took place. In fact, we had one CEO of a major
	bank who settled out of court with the Justice Department, and
	the bank's board of directors gave this CEO a 74 percent raise
	in salary, amounting to about $20 million.
	So, the question becomes this: Do we want to continue to
	allow persons who make loan applications to be punished
	criminally for falsifying information on a loan application
	while the loan originator does not face any charges if the loan
	originator denies a person credit? That is predatory lending,
	by the way. If you intentionally deny a person credit who is
	qualified for that credit, you are engaging in predatory
	lending, which is a crime.
	But the question becomes, how do we deal with it? And
	testing is the means by which we can acquire the empirical
	evidence necessary to prosecute these crimes.
	Let me start with you, Ms. Rice. Would you give me some
	indication as to how efficacious testing is, in your opinion,
	with reference to bringing forth the empirical evidence
	necessary to prosecute?
	Ms. Rice. Testing is extremely efficacious for that
	purpose. And thank you so much, Congressman Green, for that
	question. The Supreme Court actually has stated that testing is
	one of the most verifiable and efficient ways of ferreting out
	discrimination.
	Part of the challenge though, is that we don't have
	sufficient funding to support testing in the United States, and
	it is private fair housing organizations who engage in testing
	in a consistent fashion, as you have heard Frances Espinoza
	already testify to. But the challenge is that, some years we
	have very, very little funding to support testing and in some
	years we have more funding, but we never have sufficient
	funding.
	The other thing that--
	Chairman Green. Let me intercede for just a quick second. I
	am familiar with the Fair Housing Initiatives Program (FHIP)
	and the Fair Housing Assistance Program (FHAP). Here is
	something that is important. In H.R. 166, we provide for, in
	the Consumer Financial Protection Bureau (CFPB), an entity to
	conduct these tests. We want to formalize it to a greater
	degree.
	I still support FHIP and FHAP. That is a great program, so
	I am going to support it. But what I would like to know is, if
	we put this together with the CFPB, does that give you some
	greater degree of belief that we can police and deter those who
	would intentionally deny people loans? Ms. Rice?
	Ms. Rice. Yes, I do. And we vehemently support the bill
	that you referenced, the Fair Lending for All Act. It
	definitely will, and it is important for Congress to include
	protections, guardrails, so that the testing program can be
	ongoing no matter who is in control or who is at the helm of
	the organization.
	Chairman Green. Let me move quickly to Ms. Espinoza. Ms.
	Espinoza, would you agree that testing is an efficacious
	methodology, and would you support H.R. 166 as we propose
	having testing take place through the CFPB?
	Ms. Espinoza. Yes. Testing is the best way to uncover these
	predatory practices in fair housing investigations, so I do
	support--
	Chairman Green. Okay. And let me ask Mr. Perry, would you
	agree as well?
	Mr. Perry. Yes. And, in fact, journalists and individuals
	are doing it.
	Chairman Green. I hate to do this to you, but I am going to
	have to accept your yes, because I am running out of time.
	Mr. Perry. Yes.
	Chairman Green. And I can't be unfair to others by giving
	myself more time.
	Just let me say, Professor, I am very much familiar with
	Andrew Johnson and what happened, especially as it relates to
	him in 1868 when there was an effort to impeach him. I would
	add that he was the bigot of his time, and he denied the newly
	free persons the opportunity to start to amass wealth with the
	land that would have been accorded them. I can only say this, I
	don't pretend to say that this is the silver bullet, but this
	will at least help us with some of the credit issues. I do
	agree with you that the wealth issue is something that is
	paramount for us.
	With that said, my time has expired, friends. I do
	appreciate all of the witnesses for being here today. Your
	being here and being patient with us has meant a lot to us. I
	regret that we had to intercede with votes, but these things
	happen, and we now have another vote that we have to deal with.
	So thank you, all of you.
	The hearing is now adjourned, after I read a statement,
	excuse me. There is a statement that I have to read before we
	can adjourn this hearing, so please be patient as I move to the
	statement.
	I thank the witnesses for their testimony and for devoting
	their time and resources to share their expertise with this
	subcommittee. Their testimony today will help to advance the
	important work of this subcommittee and of Congress in
	addressing lending discrimination and systemic racial
	inequality.
	The Chair notes that some Members may have additional
	questions for this panel, which they may wish to submit in
	writing. Without objection, the hearing record will remain open
	for 5 legislative days for Members to submit written questions
	to these witnesses and to place their responses in the record.
	Also, without objection, Members will have 5 legislative days
	to submit extraneous materials to the Chair for inclusion in
	the record.
	This hearing is now adjourned. Thank you so much.
	[Whereupon, at 5:23 p.m., the hearing was adjourned.]

	A P P E N D I X



	February 24, 2021

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