By Ivan Villegas
WASHINGTON, D.C. – “Today, financial institutions still fail to adequately serve communities of color,” charged Janai Nelson, president and director-counsel of the NAACP Legal Defense Fund, in written testimony before the U.S. Senate Committee on Banking, Housing, and Urban Affairs this week.
In the “Fairness in Financial Services: Racism and Discrimination in Banking” hearing, Nelson addressed what he called anti-Black racism and discrimination in banking in the past and how it continues to persist today.
Among the specific areas Nelson highlighted where discrimination persists were higher opening deposits and fees, higher denial rates for mortgage and small business loans, and algorithmic bias in financial technology.
Nelson wrote, “Black communities and other communities of color have long been deprived of the full and equal opportunity to save for the future, invest in a business, buy a home, and build intergenerational wealth to sustain the futures of their children and grandchildren.”
Nelson’s testimony explains how due to racist discriminatory practices, the rate gap between Black and white homeownership is now double what it was in 1968 and how it continues to grow.
Nelson points out that in 1968, Congress passed the Fair Housing Act, meant to remedy the homeownership gap; however, as of today in terms of net worth, Black households have around seven cents to the dollar of white households.
Nelson wrote, “Congress and federal regulators must act to ensure that financial institutions offer full and equal access to people and communities of color.”
Nelson congratulated Senator Sherrod Brown for introducing the Fair Access to Financial Services Act and urged the Senate to pass this crucial legislation.
In addition, Nelson called on federal regulators to update the Community Reinvestment Act, “to ensure that banks actually serve the entire community – including communities of color…supplemented by additional legislation if necessary.”