Pub. 11 2021 Issue 1

5 PUB. 10 2020 ISSUE 4 This article originally appeared as the cover story in the January/February 2021 issue of ABA Bank Compliance magazine I N THE AFTERMATH OF THE TRAGIC KILLING of George Floyd in Minneapolis, a ra- cial justice movement has commanded society’s full attention. I know I’m not alone in feeling like these events made me forget that the world was and is still facing a global pandemic. Being geographically based in Minneapolis also undoubtedly affected how these events were hitting me personally and professionally. I’ve asked myself, “What’s next?” and “How will I be a positive vehicle for change?” Compliance professionals who manage fair lending are depended upon to uphold a com- mitment to fairness that all reputable banks make to their customers, communities and employees. While building a robust, fair lending program and demonstrating com- pliance is not an easy task, merely avoiding unlawful credit discrimination doesn’t need to be the final destination. There is always more to do, and compliance officers overseeing fair lending can provide unique and powerful viewpoints, even beyond the specific confines of Regulation B or the Fair Housing Act. Speaking at the ABA Risk and Compliance Virtual Conference in July 2020, ABA President and CEO Rob Nichols emphasized this point, saying, “when it comes to ensuring equal opportunity and access to financial products and services, you are the ones who speak up when you see something happening that isn’t right. Never forget the critical role you play in making our industry stronger, safer and more equita- ble for all.” Disparate impact The issues and efforts of the current racial justice movement are multifaceted and com- plex. One of the central themes is anti-Black racism. While much of the immediate focus surrounds police misconduct and the criminal justice system, banking is also part of the broader range of issues. Fair lending compliance practitioners are well-versed in disparate impact, which occurs when a neutral policy causes a disproportionately negative impact on a prohibited basis that is not supported by a valid business justifica - tion or necessity. The Color of Law by Richard Rothstein describes segregation by law and public policy (i.e., government), including housing issues and the overlap with mortgage lend- ing such as when agencies openly refused to insure mortgages for African Americans, influenced appraisal standards by including terms like “inharmonious racial groups,” and created the infamous color-coded maps where neighborhoods with African Ameri- cans present were colored red, designating a neighborhood with the highest risk. There was also a downstream impact on private action segregation and redlining, such as restrictive racist covenants appearing in real estate property deeds across the country. Despite progress through civil rights banking laws such as the Fair Housing Act and Equal Credit Opportunity Act, indicators of the lasting effects of historical redlining and discrimination remain. Black homeownership rates are almost as low now as they were when discrimination was legal. The census bureau data shows that in 1968, 41% of Black families owned their homes, while white homeownership was 66%. In the first quarter of 2020, the Black homeownership rate increased slightly to 44%, but was nearly 30% behind white households. Your Fair and Responsible Banking Program in 2021 and Beyond By Nicholas Roesler, CRCM continued on page 6