Federal Gov’t Announces Crackdown on Discrimination in Financial Services

It might not specifically mention debt collection or the accounts receivable management industry, but everyone’s ears should still be perking up after a number of departments within the federal government on Friday announced a crackdown on discrimination in the financial services industry.

The Department of Justice, in conjunction with the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency are setting out to tackle fair lending issues “on a broader scale than the Justice Department has ever done before,” said Attorney General Merrick Garland. In conjunction with the announcement, the CFPB shared details of an enforcement action taken against Trustmark Bank that alleged the institution discriminated against minorities by not marketing, offering, or originating home loans in communities in and around Memphis, Tenn., in which minorities made up the majority of the population, a practice known as redlining. Under the proposed settlement, the bank will pay a $5 million fine and pay $4 million into a loan subsidy program for minority neighborhoods.

While it got its name from the old-school action of actually drawing lines around neighborhoods on a map where it would not do business, modern-day redlining is far more technical in nature, CFPB Director Rohit Chopra pointed out in his remarks announcing the crackdown.

“We should never assume that algorithms will be free of bias.” Chopra said. “If we want to move toward a society where each of us has equal opportunities, we need to investigate whether discriminatory black box models are undermining that goal.”

The bank was accused of, among other allegations, not having loan officers in branches that were located in minority neighborhoods while it did have officers in other branches, and only having four of its 25 branches in Memphis in minority communities, even though 50% of the city is majority-African-American or Hispanic.

Check Also

R.I. Legislature Passes Law Requiring Bond for Collectors

In an update that was first published by ACA International, the Rhode Island legislature has …

Leave a Reply

Your email address will not be published.