House Financial Services Subcommittee Hearing on Discrimination Against LGBTQ+ in Lending and Housing

The House Financial Services Subcommittee on Oversight and Investigations held a hearing this week on the extent and effects of discrimination against persons who identify as lesbian, gay, bisexual, transgender, or queer (LGBTQ+) when seeking housing or credit in the United States. A recording of the hearing has been made available online.

Testimony by Alphonso David, President of the Human Rights Campaign, Harper Jean Tobin, Director of Policy for the National Center for Transgender Equality, and others painted a bleak picture of the economic insecurity confronting LGBTQ+ communities. Their testimony attested to the correlation of lower household incomes to lower utilization of basic banking products, such as checking and savings accounts, LGBTQ+ communities face economic insecurity to a greater degree than their non-LGBTQ+ peers. Witnesses testified that factors contributing to this economic insecurity include lack of universal protection against housing discrimination, lack of equal access to benefits for same-sex partners, and lack of family support.

No statutory fair housing or credit protections based expressly on sexual orientation or gender identity exist at the federal level, and the majority of LGBTQ+ persons live in states without such protections. Witnesses testified that federal agencies have done little to address this gap in protection for LGBTQ+ persons.

The Consumer Financial Protection Bureau (CFPB), in 2016, adopted the position that the Equal Credit Opportunity Act’s (ECOA) prohibition on sex discrimination affords broad protection against credit discrimination on the bases of gender identity and sexual orientation. However, this position did not inform any public enforcement actions in 2018 according to the CFPB’s Fair Lending Report.

The Department of Housing and Urban Development (HUD) issued rules in 2012 and 2016 to provide equal access to housing and homeless services without regard to sexual orientation, gender identity, or marital status. However, the Trump administration has proposed weakening the rules, by allowing federally-funded shelter and service providers to deny admission to transgender individuals based on their gender identity for a variety of reasons, including religious beliefs and an individual’s sex, as reflected in government documents.

“These problems are grave but not inevitable,” Ms. Tobin testified. And the lack of federal protections for LGBTQ+ persons may be remedied soon as the Supreme Court currently has a case before it on whether federal laws prohibiting sex-based discrimination protect LGBTQ+ persons. While the case before the Justices involves employment discrimination, the judgement could have implications for other federal statutes that bar sex-based discrimination, such as the Fair Housing Act (FHA) and ECOA.

CFPB Launched Searchable Prepaid Account Agreements Database

With little fanfare, the CFPB launched a searchable database of prepaid account agreements earlier this month. The database is an outgrowth of the final rule on prepaid accounts issued by the CFPB.

The rule, which came into effect earlier this year, is intended to create comprehensive consumer protections for prepaid accounts under Regulation E, which implements the Electronic Fund Transfer Act, and Regulation Z, which implements the Truth in Lending Act. To provide greater visibility into industry practices, issuers of prepaid accounts are required, with certain exceptions, to submit to the CFPB all account agreements within 30 days of an issuer offering, amending or ceasing to offer a prepaid account agreement. Notable exclusions to the new rule include gift cards and applications like Apple Pay that do not store any value.

After the CFPB provided additional information on technical specifications for agreement submission in February 2019, the deadline for initial submissions was May 1, 2019. Submissions will continue on a rolling basis, and it is expected the database will be updated accordingly.

Communicating “Early and Often” is the Motto of Financial Regulators

Several federal and state financial regulators spoke on a panel titled “Agile Regulation” at Money 20/20 in Las Vegas. The panelists’ consensus for staying on the right side of regulators and to ensure regulatory compliance was to “come early and often” to speak with each respective regulator. Many of the regulators featured noted that communication and engagement was key and that talking to regulators can have a lasting impact on a given business’s relationship with those tasked with their oversight.

Beth Knickerbocker, chief innovation officer at the Office of the Comptroller of the Currency (OCC) additionally commented that certain agencies are setting up different mechanisms to make businesses feel more comfortable speaking to them, specifically noting the OCC’s Office of Innovation.