WASHINGTON, D.C. – Senator JD Vance (R-OH) led all Republican members of the Senate Banking Committee in sending a letter to Attorney General Merrick Garland and CFPB Director Rohit Chopra urging them to reconsider their October 12 joint statement on lending discrimination against “noncitizen borrowers.” Through the statement, which dramatically upends decades of guidance from the CFPB and the Federal Reserve, the DOJ and CFPB aim to force American financial institutions to extend loans to illegal immigrants. This practice contradicts longstanding legal interpretations from federal regulators and could create situations where lenders are unable to recoup loan payments from deported illegal aliens.
“Financial institutions are right to be concerned that they may never see a return on loans issued to illegal immigrants,” said Senator Vance. “If someone is deported to their home country, how is a bank in Ohio supposed recoup the loan it was forced to issue? The federal government should be cracking down on illegal immigration – not encouraging more of it.”
Senator Vance’s letter was signed by every Republican member of the Senate Banking Committee: Senators Tim Scott (R-SC), Mike Crapo (R-ID), Mike Rounds (R-SD), Thom Tillis (R-NC), John Kennedy (R-LA), Bill Hagerty (R-TN), Cynthia Lummis (R-WY), Katie Britt (R-AL), Kevin Cramer (R-NC), and Steve Daines (R-MT).
The letter reads, in part:
“We write today to express our concerns regarding the October 12, 2023 joint statement by the Consumer Financial Protection Bureau (“CFPB”) and the Department of Justice (“DOJ”) warning financial institutions that the consideration of immigration status in loan applications may be a violation of the Equal Credit Opportunity Act (“ECOA”).
“While the CFPB and DOJ note that financial institutions are permitted to consider immigration status under the ECOA, they claim that unnecessary or overbroad reliance on immigration status “may run afoul of the law,” and that all borrowers, regardless of immigration status, are protected from discrimination. Specifically, your agencies claim that if a creditor has a “blanket policy” on immigration status, then they risk violating fair lending laws. The joint statement also suggests that as long as an applicant for credit has a good credit score and other “credit qualifications,” then his or her immigration status should not matter …
“The importance of considering immigration status when assessing the potential of repayment is nothing short of common sense. Even the CFPB notes that an “applicant’s immigration status . . . could have a bearing on a creditor’s ability to obtain repayment.” And if financial institutions cannot use immigration status in their assessment of risk, the potential of a widespread market event where a significant number of loans go into default is all the more likely. In that event, the strain placed on financial institutions may pose a contagion effect and cause broader economic repercussions impacting the financial stability of the American economy.
“While the CFPB and DOJ’s joint statement conflicts with decades of immigration status-related guidance from the CFPB and the Fed, it also poses serious risks to financial stability— encouraging financial institutions to ignore critical dispositive factors in their calculation of risk. Additionally, the fact that your agencies moved forward with this guidance outside of the APA rulemaking process, and without any advanced communication or feedback from industry, raises even more concerns.”