Bank regulator faces backlash over comments on racism
A top bank regulator on Thursday defended his commitment to fighting racism in banking as senators ripped him for controversial comments he made Wednesday to a House panel.
Democrats on the Senate Banking panel questioned Comptroller of the Currency Joseph Otting on his Wednesday remarks that he’s never personally witnessed racial discrimination, but believes people who have told him it exists.
Otting further raised eyebrows Wednesday when he said he wasn’t familiar with the details of the rally held by white nationalists in Charlottesville last summer, and that he didn’t read a newspaper or watch much TV beyond ESPN and CNBC.
Otting sought to clarify those comments, made before the House Financial Services Committee, during a Thursday hearing before the Senate Banking Committee. The comptroller reiterated he’s never personally experienced racism, but was aware of instances where it happened and believes that there is discrimination in mortgage lending.
“There’s lots of evidence of inequity in the world,” Otting said.
That wasn’t enough to pacify Democrats who skewered Otting’s response and questioned his commitment to tackling racism in banking.
Sen. Sherrod Brown (D-Ohio), the panel’s ranking Democrat, said Otting’s statements were “ridiculous” for any American adult to make and accused the comptroller of being insensitive about racial discrimination.
“You had to come to the conclusion that it exists because a ‘friend in the inner city’ told you it exists,” Brown said.
The controversy over Otting’s comments comes as the Office of the Comptroller of the Currency works on updates to the Community Reinvestment Act (CRA), a 1970s law meant to fight decades of racial discrimination in banking.
The CRA orders regulators to judge banks on their investments and presence in minority communities, and efforts to lend and serve nonwhite customers. The law is meant to target firms that fail to offer mortgage credit and banking services in vulnerable, predominantly minority communities.
Financial sector advocates and Republican lawmakers say the CRA fails to consider evolutions in banking and the broader digital footprint of retail banks.
But civil rights groups, fair lending advocates and Democrats have expressed fears that a CRA rewrite could gut the law and freeze more minorities out of the banking system.
Otting said he’s committed to protecting the intent of the CRA and giving banks clearer, stronger and more helpful standards meant to expand banking services to vulnerable communities. He also said he’s committed to working with civil rights and fair lending groups as OCC works on the new proposal.
“It won’t be me who will do the CRA changes,” Otting said. “It will be the communities in which the CRA is usually deployed.”
Brown questioned whether Otting would preserve the integrity of the CRA based on his stated lack of experience with and knowledge of racial discrimination.
“Why should the public trust you to overhaul the CRA, a product of the civil rights movement, meant to address generations of discrimination?” Brown asked Otting.
Brown also pressed Otting on the predominance of white men in banking and the elite networks that could prevent women and minorities from reaching senior levels. He asked Otting if he believes an “old-boy network in hiring” benefits white men like themselves, and noted that the vast majority of Senate Banking Committee members were white men.
Otting replied that he didn’t see systemic advantages for well-connected white men, and if he did “I wouldn’t support that.”
Sen. Pat Toomey (R-Pa.), shot back at Brown that all four senators from their home states were white men saying, “It’s not obvious to me that the voters of those states are part of a good-old-boys network.”
Otting, a former bank president, is one of President Trump’s most politically polarizing financial regulatory appointees. He was opposed almost unanimously by Senate Democrats over concerns about foreclosures he presided over as president of OneWest bank after the 2007 financial crisis.
Treasury Secretary Steven Mnuchin was OneWest’s founder and faced many of the same questions during his confirmation battle.
Republicans have praised Otting’s efforts to remove post-crisis lending restrictions on banks, and loosen Dodd-Frank Act trading rules.
Otting also faced accusations that he exhibited racial discrimination himself while leading OneWest and handling the thousands of failing mortgages it acquired from other banks.
Sen. Elizabeth Warren (D-Mass.) said only one of its OneWest’s 74 branches in Southern California were located in majority-minority communities, citing public records.
“Evidently, the community that OneWest wanted to serve was not the African-American community, the Latino community or the Asian-American community,” Warren said.
Otting said the data Warren cited was selectively gathered and that those branches were inherited from failing banks OneWest had purchased and attempted to salvage.