Biden Admin Threatens Banks That Refuse To Lend Money To Illegal Immigrants

Biden Admin Threatens Banks That Refuse To Lend Money To Illegal Immigrants

The Biden administration released a statement Thursday warning financial institutions against using a person’s immigration status in credit applications.

The Consumer Financial Protection Bureau (CFPB) and the Department of Justice (DOJ) released a joint statement telling financial institutions that while it is not illegal to consider a person’s immigration status in the decision on whether to lend money, an overreliance on it could run afoul of the law, according to the statement. The statement implicates the Equal Credit Opportunity Act (ECOA), which makes it illegal to discriminate on the basis of race, color, religion, national origin, sex and more in considering a person’s credit application as the mechanism, even though the law does not list citizenship status as a protected attribute.

“Fair access to credit is crucially important for building wealth and strengthening household financial stability,” Rohit Chopra, CFPB director, said in a press release. “The CFPB will not allow companies to use immigration status as an excuse for illegal discrimination.”

The CFPB notes that the reason for the guidance comes after the agency received a number of instances of consumers being rejected in their applications for credit cards and auto, student, personal and equipment loans on the basis of their noncitizen status despite having a good credit history and a tie to the United States, according to the press release.

“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,” Kristen Clarke, assistant attorney general of the DOJ’s Civil Rights Division, said in the press release. “This guidance reminds lenders that denying someone access to credit based solely on their actual or perceived immigrant status may violate federal law.”

The two agencies acknowledge that while the ECOA permits creditors to consider someone’s citizenship status, the act of doing so may violate prohibitions on the consideration of other factors like national origin or race, according to the press release. The regulators emphasize that there is no “safe harbor” when considering an applicant’s immigration status.