Bernanke Goes After Racial Discrimination In Bank Lending
By Eleazar David Meléndez | November 16, 2012 7:46 AM EST
A day after minutes were released showing the continuing concern the U.S. central bank has in getting macro-level economic guidance right, the head of that bank went back to micro basics, advocating against racial discrimination in lending within a speech about the state of the housing market.
"Lower-income and minority communities are often disproportionately affected by problems in the national economy, and the effects of the housing bust have followed that unfortunate pattern," Bernanke said at the Operation HOPE Global Financial Dignity Summit in Atlanta.
Regarding the general state of the housing market, Bernanke said the housing market was still being affected by tight lending standards, something that he saw improving with the rest of the economy.
"The housing sector is far from being out of the woods," Bernanke said. "Strengthening and broadening the housing recovery remain a critical challenge for policymakers, lenders and community leaders.”
But rather than focusing on the general state of the market, Bernanke’s speech dwelled on the disparities still seen in lending to minorities, highlighting the two main issues faced at the present.
"One is redlining, in which mortgage lenders discriminate against minority neighborhoods, and the other is pricing discrimination, in which lenders charge minorities higher loan prices than they would to comparable nonminority borrowers," Bernanke said.
"We remain committed to vigorous enforcement of the nation's fair lending laws," he added.
As the nation’s most visible bank regulator since the global financial crisis of 2008, the Federal Reserve has some discretion in guiding banks towards complying to U.S. anti-discrimination laws when lending. Most recent headlines where regulators have moved against banks for exhibiting patterns of discrimination have come from the Justice Department. Over the past year, both Wells Fargo & Co. and Bank of America Corporation, two of the nation’s largest lenders have been involved in federal lawsuits alleging racial discrimination in lending.
Many smaller mortgage originators have been sued for targeting minorities when offering subprime loans during the economy’s heyday.
Last month, the American Civil Liberties Union sued Morgan Stanley for predatory lending practices that targeted minorities, the first time an investment bank was involved in that kind of legal action.
To contact the editor, e-mail:
Most Popular Slideshows
- Flight MH17 Attack: Russians Claim 'Putin A Terrorist,' Memorial at Dutch Embassy Overflows [PHOTOS]
- Typhoon Rammasun Claims 18 Lives in China, Incurs $4.32B Losses (PHOTOS)
- Ellen DeGeneres Caught Cheating with Mutual Friend Before Portia de Rossi’s Rehab – Reports [PHOTOS]
- Malaysia Airlines MH17: Vital Black Boxes Finally Land in Hands of Malaysian Authorities, Rebels Announce Ceasefire (PHOTOS/VIDEOS)
Join the Conversation
- Tourre on stand says email in SEC case 'not accurate'
- Syrian authorities blocking access to needy in Homs - Red Cross
- Faith in European Union at low ebb, EU poll says
- Former UBS banker gets 18 months, $1 million fine, for muni bid-rigging scheme
- U.S. judge halts challenges to Detroit's bankruptcy bid
- Samsung Galaxy Note 4 Apps Leak Online, Five Fresh Features to Expect from the Android Smartphone
- Moto 360 Price Speculations, Key Features, Strategic Release Date, Design: A Watch That is More Than Just Time
- Windows Phone 8.1 Update Rollout: 20 Nokia Lumia Phones Eligible and 13 New Features to be Added
- Three New Moto G Successors Spotted in FCC Document Dubbed Moto G2, Moto M and More --Reports
- iPad Air 2 Release Date Will Skip IGZO Panel; To Rollout with Super-Slim iPad Mini Air
- Upcoming iPad Mini 3 Could be 30% Thinner and Likely be Called iPad Mini Air; Apple Q3 Results Show 9% Decrease in iPad Sales
- Sony Xperia M2 vs. Moto G – Specifications, Features and Price Showdown