U.S. Rep. Robert Pittenger plans to file a bill this week that would repeal a part of the Dodd-Frank financial reform law that requires banks to collect demographic data on small-business loan applicants.
The section is intended to allow regulators to ensure banks aren’t discriminating against minorities or women who seek capital for their businesses. Such discrimination is already against the law. Similar data is kept on mortgage applicants.
But Pittenger, a Charlotte Republican, said the additional requirement is burdensome and unnecessary and the government should not be in the business of dictating who banks should lend to. Pittenger said he’s heard from a number of community banks worried about that provision in Dodd-Frank.
“Let’s get back to the basics and let bankers be bankers,” he said. “Frankly, the only issue that banks ought to be involved in is if somebody is creditworthy.”
The portion of Dodd-Frank known as Section 1071 was cited by bank executives as an area of concern not long after the law was passed in 2010.
They’ve argued that banks would lose the flexibility to structure commercial loans in the most reasonable way, in an effort to avoid the appearance of favoring one borrower over another.
While mortgages are more or less a commodity, bankers say business loans can vary dramatically from one to the other.
Supporters of the provision, including U.S. Sen. Elizabeth Warren, say it’s an important tool to monitor fair lending practices.
Pittenger said his bill is not intended to take away from fair lending oversight, but he denied that discrimination in loans is a problem. He said existing laws are already sufficient to make sure it’s not happening.
He also said the Dodd-Frank provision would lead regulators to pressure banks to lend to people who aren’t creditworthy.
“The government shouldn’t be involved in forcing a social agenda on lending institutions,” he said. “That’s how we got in that mess to begin with, we were loaning money to people that weren’t creditworthy.”
Pittenger is in his first term in Congress, representing south Charlotte, west and north Mecklenburg County and parts of Union and Iredell counties in a seat formerly held by Sue Myrick.
Pittenger serves on the House Financial Services Committee and has called for ratcheting back “oppressive” bank regulations. He served on the board of Charlotte-based Park Meridian Bank before it was acquired by Regions Financial in 2001.
Dunn: 704-358-5235 Twitter: @andrew_dunn
The Charlotte Observer welcomes your comments on news of the day. The more voices engaged in conversation, the better for us all, but do keep it civil. Please refrain from profanity, obscenity, spam, name-calling or attacking others for their views.
Have a news tip? You can send it to a local news editor; email firstname.lastname@example.org to send us your tip - or - consider joining the Public Insight Network and become a source for The Charlotte Observer.Read moreRead less