In a Nov. 2 post shared on X, 2024 presidential hopeful and South Carolina Republican Sen. Tim Scott claimed the Biden administration is purportedly directing banks to ignore the immigration status of borrowers.
Instead of preventing illegal immigration, the Biden administration is encouraging it by directing banks to ignore the immigration status of borrowers. Today, I joined @JDVance1 & my @BankingGOP colleagues in demanding the administration retract this dangerous guidance. https://t.co/MFOrud7UOI
— Tim Scott (@SenatorTimScott) November 2, 2023
Scott and the Banking Committee sent a letter to the Consumer Financial Protection Bureau (CFPB) and the U.S. Department of Justice (DOJ) about a recent statements made both agencies regarding banking lenders and prospective borrowers immigration status.
“Instead of preventing illegal immigration, the Biden administration is encouraging it by directing banks to ignore the immigration status of borrowers. Today, I joined @JDVance1 & my @BankingGOP colleagues in demanding the administration retract this dangerous guidance,” Scott said in the X post while sharing the letter.
The CFPB and the DOJ recently released a joint statement on fair lending practices for borrowers who are not citizens under the Equal Credit Opportunity Act (ECOA). According to the statement, while ECOA does not prohibit lenders from considering a borrower’s immigration status, the act also prohibits discrimination based on the borrower’s immigration status. In addition, the statement warns that overbroad reliance on immigration status, particularly when it is rooted in bias, violates ECOA and other laws.
Both the CFPB and the DOJ issued respective press releases reiterating that a borrower’s immigration status cannot be used for discriminatory purposes during the credit decision-making process.
“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,” Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division said. “This guidance reminds lenders that denying someone access to credit based solely on their actual or perceived immigrant status may violate federal law,” Clarke added.
Scott and his Republican colleagues, Sens. J.D. Vance (Ohio), Mike Crapo (Idaho), M. Michael Rounds (South Dakota), Thom Tillis (North Carolina), John Kennedy (Louisiana), Bill Hagerty (Tennessee), Cynthia Lummis (Wyoming), Katie Boyd Britt (Alabama), Steve Daines (Montana), and Kevin Cramer (North Dakota) signed a letter addressed to both agencies following their joint statement.
In the letter, the group, which comprises the Senate Banking Committee, expressed their concerns that the agencies’ joint statement “appears to be at odds with the official guidelines for various federal lending programs, many of which require U.S. citizenship or permanent residency to qualify.”
Investopedia noted in an April 2023 article focused on banking rights for immigrants that banks are not supposed to ask borrowers about their immigration status. In addition, the article explains illegal immigrants can open a bank account with a legal form of ID, such as a passport, as well as a social security number (SSN) or individual taxpayer identification number (ITIN). The article also outlines the process of obtaining an ITIN.
In a February 2022 article, Boundless states non-citizens who do not already have a green card must pass either a green card test or a substantial presence test in order to open a bank account. (RELATED: Did Joe Biden Convince Benjamin Netanyahu To Call For A Cease-Fire To Get Hostages Out Of Gaza?)
In 2017, immigrants who were denied credit by Wells Fargo Bank based on their immigration status were able to sue following a ruling from a federal judge in San Francisco, Reuters reported.
Experts told Check Your Fact that the DOJ/CFPB statement does not encourage lending to illegal immigrants.
Cato Institute Vice President and Director of the Center for Monetary and Financial Alternatives Norbert Michel denied Scott’s claim that banks are being encouraged to lend illegal immigrants.
“The joint CFPB/DOJ statement does not demand that banks help fund anything. Nor does it encourage banks to lend to illegal immigrants. The statement is correct to point out that ECOA prohibits discrimination by creditors based on multiple factors, including national origin. If the Senators do not like ECOA – a sensible position given how broad it is – they should propose a new law. That’s what the Senate is supposed to do,” Michel told Check Your Fact via email.
Similarly, Dr. Tom K. Wong, an immigration expert from University of California San Diego, said he was not aware of any data supporting Scott’s claim.
“The CFPB and Justice Department issued a joint statement that ‘reminds financial institutions that all credit applicants are protected from discrimination on the basis of their national origin, race, and other characteristics covered by the Equal Credit Opportunity Act, regardless of their immigration status.’ The statement made by Sen. Tim Scott sensationalizes the statement. There is no data that I am aware of that supports Scott’s statement that this is ‘dangerous guidance,’” Wong said.
Alexandra Thornton, senior director, financial regulation at the Center for American Progress also refuted the claim.
“Vance’s characterization of the administration’s action is incorrect. It appears to be based on this joint statement issued by the Department of Justice and Consumer Financial Protection Bureau on October 12, but that statement does not encourage banks to ignore the immigration status of borrowers. Rather, it says that unnecessary and overbroad reliance on immigration status, including when based on bias, may violate the antidiscrimination provisions of the Congressionally-mandated Equal Credit Opportunity Act,” Thornton said.
A spokesperson for Scott, the Senate Banking Committee Ranking Member, maintained that the CFPB and DOJ’s move will encourage illegal immigration.
“As stated in the letter, on October 12 the Department of Justice (DOJ) and the Consumer Financial Protection Bureau (CFPB), under the Biden administration, released a joint statement warning financial institutions that the consideration of immigration status in loan applications may be a violation of the Equal Credit Opportunity Act (“ECOA”). The executive branch’s directive for banks to not rely on a borrowers’ immigration status poses serious risks to financial stability and goes against sound lending practices. Further, one of the administration’s agencies asserting this guidance is one of the direct supervisory bodies over the private sector entities at which the directive is aimed – making it clear that it is intended to pressure banks. This new DOJ/CFPB directive is another signal from the Biden administration that entering our country illegally will be met without consequence, encouraging additional illegal immigration at a time of record-highs,” the spokesperson said.
Check Your Fact has also contacted the White House, DOJ, CFPB, and multiple immigration experts for comment and will update this piece accordingly if one is received.