The Justice Department and the Consumer Financial Protection Bureau (CFPB) have issued a joint statement saying illegal immigrants cannot be discriminated against when applying for credit.
However, given that an undocumented migrant could potentially face deportation at any moment, this statement raises questions about its practical implications.
The ECOA Allows Creditors to Consider Immigration “When Necessary.”
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The joint statement explained in a Press release issued by the DOJ’s Office of Public Affairs stated that,
“while the ECOA [Equal Credit Opportunity Act] allows creditors to consider immigration status when necessary to ascertain the creditor’s rights regarding repayment, unnecessary or overbroad reliance on immigration status may violate the Act’s prohibition of discrimination on the basis of national origin, race or another prohibited basis.”
Neither the ECOA nor Its Regulations Provide Companies a “Safe Harbor.”
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The press release explained that the joint statement provides clarity that the ECOA and its rules do not offer companies a “safe harbor” to avoid following other laws that prohibit discrimination based on immigration status.
All Credit Applicants Are Protected From Discrimination Regardless of Immigration Status
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The Justice Department and Consumer Financial Protection Bureau (CFPB) said they released the statement as a reminder to financial institutions that all credit applicants, no matter their immigration status, are safeguarded from discrimination based on factors such as their national origin and race, under the Equal Credit Opportunity Act (ECOA).
Why Did the DOJ and CFPB Issue the Statement?
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The reason the DOJ and CFPB gave for issuing the statement was “because consumers have reported being rejected for credit cards as well as for auto, student, personal and equipment loans because of their immigration status.”
Consumers Rejected Even With Strong Credit Ratings
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The press release from the DOJ’s office continued to explain that applicants were rejected “…even when they have strong credit histories and ties to the United States and are otherwise qualified to receive the loans.”
“Unlawful Bias Will Not Prevent People the Opportunity to Take Out a Loan.”
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“Lenders should not deny people the opportunity to take out a loan to buy a home, build their businesses, or otherwise pursue their financial goals because of unlawful bias and without regard to their actual ability to repay,” said Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division.
Denying Credit Based “Solely” on a Person’s Immigration Status May Violate Federal Law
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“This guidance reminds lenders that denying someone access to credit based solely on their actual or perceived immigrant status may violate federal law,” Clarke stated.
The key message from the DOJ appears to be that if banks reject credit applications based solely on immigration status without any other valid reason, they could potentially be breaking the law.
Companies “Cannot Use Immigration Status as an Excuse for Illegal Discrimination.”
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“Fair access to credit is crucially important for building wealth and strengthening household financial stability,” said CFPB Director Rohit Chopra. “The CFPB will not allow companies to use immigration status as an excuse for illegal discrimination.”
Some Lenders Have Implemented Blanket Policies of Refusing Credit Based on Immigration Status
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Certain financial institutions have upheld broad policies that refuse credit to individuals based on their immigration status without considering their situations and their proven capacity to repay.
Financial Institutions Have Incorrectly Claimed That the ECOA Shields Lenders From Liability
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Other lenders have falsely asserted that the ECOA and its regulations shield them whenever immigration status is considered on credit applications.
Where Does Biden Currently Stand on Immigration?
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In his efforts to reduce the surging influx of people and the ensuing political repercussions, President Biden has adopted, or at least shown tolerance for, specific anti-immigrant methods previously advocated by his predecessor, Trump.
Biden Seeking to Waive Environmental Regulations to Build Additional Wall
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Recently, officials from the Biden administration formally requested environmental regulations to be waived to permit the construction of a further 20 miles of border wall. The additional wall is planned to be built in a section of Texas grappling with illegal migration.
Astonishing Shift in Policy From Biden
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This shift in policy represents a remarkable change of stance on an issue that once intensely mobilized President Biden and Democrats.
Biden’s Inauguration Speech Stated That “Building a Massive Wall” Was a “Waste of Money.”
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In a proclamation the day he was inaugurated in 2021, Biden said, “But building a massive wall that spans the entire southern border is not a serious policy solution. It is a waste of money that diverts attention from genuine threats to our homeland security.”
Funds for Additional Wall Approved by Former Trump Administration
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Congress had approved funding for the wall extension during Trump’s former Presidency, and President Biden has now confirmed he has no power to redirect funds.
“I Was Told I Had No Choice” Biden Defends Himself Over the Wall
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“The wall thing?” Mr. Biden asked reporters during an interview. “Yeah. Well, I was told that I had no choice, that I, you know, Congress passes legislation to build something, whether it’s an aircraft carrier wall or provide for a tax cut. I can’t say, ‘I don’t like it. I’m not going to do it,’” stated Biden.
Officials Wanted to Redirect Money to Other Border Priorities
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Officials in the White House have admitted they tried for years to get Congress to redirect the wall funds to other border priorities but without success.
Biden Administration Refused to File a Lawsuit to Circumvent Impoundment Control Act
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Legal counsel to President Biden had suggested that the only means to circumvent the Impoundment Control Act, which mandates the President to allocate funds as directed by Congress, was through filing a lawsuit. However, the Biden administration has decided against it.
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