When Will It All End?

In 1977, the US Government passed the Community Reinvestment Act. According to Wikipedia, the purpose of the law was to compel banks and other lenders (at the risk of losing their charters) to “…reduce discriminatory credit practices against low-income neighborhoods, a practice known as redlining.”

Flash forward to the Dodd-Frank Wall Street Reform and Consumer Protection Act, which was passed in 2010. As part of that legislation, the Consumer Financial Protection Bureau was created. Last week, that Bureau released its new regulations for lenders to follow in order to protect borrowers. Those regulations require much more stringent information from borrowers, and criteria for lenders, before they approve loans. Certain borrowers are going to be denied credit.

So how long will it take before borrowers, denied said credit based upon the Consumer Financial Protection Bureau requirements, bring suit against lenders for violating the Community Reinvestment Act?

All comments and questions are welcomed.

Bob Bilkie, CFA