Democrats went on the offensive with the Trump administration over fair lending issues on Tuesday, attacking a proposed revision to a key fair lending law, and renewing pressure on the Consumer Financial Protection Bureau to fire a top fair lending political appointee.
Questioning top financial regulators at a Senate Banking Committee hearing today, Sen. Elizabeth Warren, D-Mass., criticized a new proposal from the Office of the Comptroller of the Currency as weakening rules meant to give banks incentive to loan to underserved communities.
Comptroller of the Currency Joseph Otting fired back by saying she didn’t understand the rulemaking process. It was one of several tense exchanges during a brief question period by the Massachusetts Democrat, who is weighing a presidential run.
The OCC has proposed revisions to the Community Reinvestment Act, a law aimed at preventing racially discriminatory practices in lending that was passed in the 1970s. It’s part of an effort by the agency to update rules for lending and banking to accommodate for the increased role that the Internet plays in those activities, and the shift in banking towards mobile devices and away from bank branches.
But Democrats fear those changes could soften the law aimed at economic development and anti-discrimination in impoverished areas or minority communities.
Warren’s criticism of the proposal led to a testy exchange with Otting, the head of the agency seeking to revise that law.
“We do not want to weaken those standards, that is inaccurate,” said Otting.
“This approach is designed to allow banks to invest even less in underserved communities than they do already,” said Warren.
“I disagree with that statement,” interjected Otting.
Warren fired back: “Yeah, I’m sure you do.”
Sen. Robert Menendez, D-N.J., pressed the other bank regulators present if they would support the OCC’s initial proposal, which the agency says it plans to revise further as it receives feedback from consumers, banks, and other regulators.
Menendez asked both the Federal Reserve’s vice chairman for supervision, Randal Quarles, and Federal Deposit Insurance Corp. Chairman Jelena McWilliams if they supported removing geography as part of the criteria for fair lending evaluation under the law.
“I think we need to take a look at the role branches are playing,” in the digital age, said McWilliams. “Branches are still important,” she said, in a number of moderate-to-low income neighborhoods and rural areas.
It was not the only fair lending line of questioning that Democrats hoped to pressure Trump administration officials over today.
Earlier in the hearing, the committee’s top Democrat, Sen. Sherrod Brown, D-Ohio, asked each of the regulators before him if they would remove an employee in charge of fair lending regulations accused of racism or sexism. Each said they would take issue with an employee who made sexist or racist remarks.
The question was aimed at a political appointee at the Consumer Financial Protection Bureau, Eric Blankenstein. Blankenstein wrote, and apologized for, controversial blog posts on racism and hate crimes that he published in 2004. Trump budget chief Mick Mulvaney appointed Blankenstein in Mulvaney’s capacity as acting director of the bureau.
In an internal Bureau email obtained by the Examiner, Blankenstein apologized for his “poor judgment in choice of words” in the blog posts, including one in which he spelled out a racial slur in a hypothetical context.
“Did one of my posts use a racial epithet?” Blankenstein wrote his colleagues. “Yes, but only in the context of discussing the insight its use by a hypothetical third person could give us into that person’s thought process. I have never used and will never use a racial epithet to describe anyone.”
The bureau, which did not have a witness at today’s hearing, has not indicated that they’ll remove Blankenstein from his post. A bureau spokesperson declined to comment on the matter.