Dear Anuj,
Most studies on the impact of directed lending on poverty reduction efforts stop at comparing the regional and institutional variations in the outreach. Hard data crunching is missing probably due to lack of datasets for making the exercise meaningful.
I liked Burgess, Pande and Wong's 2004 paper "Banking for the Poor: Evidence from India" which does see a positive correlation between direct lending programmes and increased bank borrowing among the poor, in particular low caste and tribal groups. However, the authors conclude with a cautionary warning regarding the counterfactual - whether India could have achieved the same level of poverty reduction at a lower cost by pursuing other options - microfinance/ land reforms.
(URL http://econ.lse.ac.uk/staff/rburgess/eea/jeeabankindia.pdf)
Best
Ratnesh
On Tuesday, February 18, 2014 11:59 PM, "MicrofinancePractice@yahoogroups.com" <MicrofinancePractice@yahoogroups.com> wrote:
15 Messages
Digest #3718
Messages
Tue Feb 18, 2014 6:19 am (PST) . Posted by:
danrozas
All -- it's rare I get to connect my MF experience with my years working in the US mortgage market (Fannie Mae). But thought I'd share a brief analysis I did using data from early on in the crisis that showed that, at least at Fannie Mae (the largest mortgage holder at the time, with about 25% of market share), government mandates to increase lending to minorities and the poor did not significantly contribute to the subsequent portfolio meltdown. Instead, the biggest culprit was a different sort of high-risk loan (Alternative- A, aka Alt-A) that actually tended to have a lower portion of minority/poor households than the portfolio average. That these loans came to be conflated with minority lending is unfortunately not a coincidence, but the result of a concerted effort by right wing politicians & think tanks.
http://www.danielro zas.com/housing/ 2012/06/11/ affordable- housing-goals- and-the-collapse -of-fannie- mae-debunking- the-myth/ http://www.danielro zas.com/housing/ 2012/06/11/ affordable- housing-goals- and-the-collapse -of-fannie- mae-debunking- the-myth/
Daniel
http://www.danielro zas.com/housing/ 2012/06/11/ affordable- housing-goals- and-the-collapse -of-fannie- mae-debunking- the-myth/ http://www.danielro zas.com/housing/ 2012/06/11/ affordable- housing-goals- and-the-collapse -of-fannie- mae-debunking- the-myth/
Daniel
Tue Feb 18, 2014 6:30 am (PST) . Posted by:
"Meyer, Richard"
For the wide range of members of this group, it would be useful if you would explain Alt A loans. Dick
From: MicrofinancePractic e@yahoogroups. com [mailto:MicrofinancePractic e@yahoogroups. com] On Behalf Of danrozas@yahoo. com
Sent: Tuesday, February 18, 2014 8:48 AM
To: MicrofinancePractic e@yahoogroups. com
Subject: [MFP] RE: The Equal Credit Opportunity Act / USA
All -- it's rare I get to connect my MF experience with my years working in the US mortgage market (Fannie Mae). But thought I'd share a brief analysis I did using data from early on in the crisis that showed that, at least at Fannie Mae (the largest mortgage holder at the time, with about 25% of market share), government mandates to increase lending to minorities and the poor did not significantly contribute to the subsequent portfolio meltdown. Instead, the biggest culprit was a different sort of high-risk loan (Alternative- A, aka Alt-A) that actually tended to have a lower portion of minority/poor households than the portfolio average. That these loans came to be conflated with minority lending is unfortunately not a coincidence, but the result of a concerted effort by right wing politicians & think tanks.
http://www.danielro zas.com/housing/ 2012/06/11/ affordable- housing-goals- and-the-collapse -of-fannie- mae-debunking- the-myth/
Daniel
From: MicrofinancePractic e@yahoogroups. com [mailto:MicrofinancePractic e@yahoogroups. com] On Behalf Of danrozas@yahoo. com
Sent: Tuesday, February 18, 2014 8:48 AM
To: MicrofinancePractic e@yahoogroups. com
Subject: [MFP] RE: The Equal Credit Opportunity Act / USA
All -- it's rare I get to connect my MF experience with my years working in the US mortgage market (Fannie Mae). But thought I'd share a brief analysis I did using data from early on in the crisis that showed that, at least at Fannie Mae (the largest mortgage holder at the time, with about 25% of market share), government mandates to increase lending to minorities and the poor did not significantly contribute to the subsequent portfolio meltdown. Instead, the biggest culprit was a different sort of high-risk loan (Alternative- A, aka Alt-A) that actually tended to have a lower portion of minority/poor households than the portfolio average. That these loans came to be conflated with minority lending is unfortunately not a coincidence, but the result of a concerted effort by right wing politicians & think tanks.
http://www.danielro zas.com/housing/ 2012/06/11/ affordable- housing-goals- and-the-collapse -of-fannie- mae-debunking- the-myth/
Daniel
Tue Feb 18, 2014 6:55 am (PST) . Posted by:
williamomaddocks
Hi Anuj,
While the mortgage default issue has now shifted to the "jumbo loan" end of the market its because many of the lower income people who got mortgages prior to 2009 have already defaulted. As we know the subprime mortgage debacle had the disastrous effect of making too much credit available to too many people and often in the same neighborhoods that had been previously red lined. According to a report on NPR last May more than half the wealth in Black and Latino communities was erased by the banking crisis which has left millions underwater with mortgages bigger than their houses are worth and little to no relief from the banks or the federal government. I always disagreed with the "credit as a human right" concept. Why should being in debt be anyone's sacred right?
Its ironic that in Latino and other immigrant communities informal savings-based arrangements made it possible for many to buy houses when prices were not so inflated and employment was more prevalent. I worked in a predominantly Portuguese immigrant community for two decades and saw "saving up" and pooled savings among family members the primary source of credit since the banks were not interested in extending credit to immigrants.Back in the 90's Jeff Ashe and I tried to bring the Working Capital peer lending concept to New Bedford' s Portuguese fisherman they weren't interested because they already had access to credit from community funds family members had assiduously saved.
I be curious to know how many minority and immigrant communities in the U.S. are still using savings-based financial tools in this post-banking crisis era?
Bill
While the mortgage default issue has now shifted to the "jumbo loan" end of the market its because many of the lower income people who got mortgages prior to 2009 have already defaulted. As we know the subprime mortgage debacle had the disastrous effect of making too much credit available to too many people and often in the same neighborhoods that had been previously red lined. According to a report on NPR last May more than half the wealth in Black and Latino communities was erased by the banking crisis which has left millions underwater with mortgages bigger than their houses are worth and little to no relief from the banks or the federal government. I always disagreed with the "credit as a human right" concept. Why should being in debt be anyone's sacred right?
Its ironic that in Latino and other immigrant communities informal savings-based arrangements made it possible for many to buy houses when prices were not so inflated and employment was more prevalent. I worked in a predominantly Portuguese immigrant community for two decades and saw "saving up" and pooled savings among family members the primary source of credit since the banks were not interested in extending credit to immigrants.Back in the 90's Jeff Ashe and I tried to bring the Working Capital peer lending concept to New Bedford' s Portuguese fisherman they weren't interested because they already had access to credit from community funds family members had assiduously saved.
I be curious to know how many minority and immigrant communities in the U.S. are still using savings-based financial tools in this post-banking crisis era?
Bill
Tue Feb 18, 2014 7:04 am (PST) . Posted by:
danrozas
Thanks Dick -- indeed, there's much to explain. The article provides some background -- I'd post the text here, but it's really dependent on referencing the graphs in the blog...
Anyway, briefly, Alt-A loans are best described as loans to people with reasonably high credit scores (i.e. good credit history), but the loans had other risky characteristics -- lower requirements for income documentation, for example, higher leverage, interest-only repayment periods, etc. Before the crisis, the repayment rates on these loans were only slightly lower than prime loans (i.e. highest quality loans), but they really tanked once the mortgage market collapsed. Take a look at the blog, which goes into more detail:
http://www.danielro zas.com/housing/ 2012/06/11/ affordable- housing-goals- and-the-collapse -of-fannie- mae-debunking- the-myth/ http://www.danielro zas.com/housing/ 2012/06/11/ affordable- housing-goals- and-the-collapse -of-fannie- mae-debunking- the-myth/
Daniel
Anyway, briefly, Alt-A loans are best described as loans to people with reasonably high credit scores (i.e. good credit history), but the loans had other risky characteristics -- lower requirements for income documentation, for example, higher leverage, interest-only repayment periods, etc. Before the crisis, the repayment rates on these loans were only slightly lower than prime loans (i.e. highest quality loans), but they really tanked once the mortgage market collapsed. Take a look at the blog, which goes into more detail:
http://www.danielro zas.com/housing/ 2012/06/11/ affordable- housing-goals- and-the-collapse -of-fannie- mae-debunking- the-myth/ http://www.danielro zas.com/housing/ 2012/06/11/ affordable- housing-goals- and-the-collapse -of-fannie- mae-debunking- the-myth/
Daniel
Tue Feb 18, 2014 7:23 am (PST) . Posted by:
"Meyer, Richard"
Thanks for clarification. What category of loans did the so-called liar loans fall into and what were their characteristics? Dick
From: MicrofinancePractic e@yahoogroups. com [mailto:MicrofinancePractic e@yahoogroups. com] On Behalf Of danrozas@yahoo. com
Sent: Tuesday, February 18, 2014 9:55 AM
To: MicrofinancePractic e@yahoogroups. com
Subject: [MFP] RE: The Equal Credit Opportunity Act / USA
Thanks Dick -- indeed, there's much to explain. The article provides some background -- I'd post the text here, but it's really dependent on referencing the graphs in the blog...
Anyway, briefly, Alt-A loans are best described as loans to people with reasonably high credit scores (i.e. good credit history), but the loans had other risky characteristics -- lower requirements for income documentation, for example, higher leverage, interest-only repayment periods, etc. Before the crisis, the repayment rates on these loans were only slightly lower than prime loans (i.e. highest quality loans), but they really tanked once the mortgage market collapsed. Take a look at the blog, which goes into more detail:
http://www.danielro zas.com/housing/ 2012/06/11/ affordable- housing-goals- and-the-collapse -of-fannie- mae-debunking- the-myth/
Daniel
From: MicrofinancePractic e@yahoogroups. com [mailto:MicrofinancePractic e@yahoogroups. com] On Behalf Of danrozas@yahoo. com
Sent: Tuesday, February 18, 2014 9:55 AM
To: MicrofinancePractic e@yahoogroups. com
Subject: [MFP] RE: The Equal Credit Opportunity Act / USA
Thanks Dick -- indeed, there's much to explain. The article provides some background -- I'd post the text here, but it's really dependent on referencing the graphs in the blog...
Anyway, briefly, Alt-A loans are best described as loans to people with reasonably high credit scores (i.e. good credit history), but the loans had other risky characteristics -- lower requirements for income documentation, for example, higher leverage, interest-only repayment periods, etc. Before the crisis, the repayment rates on these loans were only slightly lower than prime loans (i.e. highest quality loans), but they really tanked once the mortgage market collapsed. Take a look at the blog, which goes into more detail:
http://www.danielro zas.com/housing/ 2012/06/11/ affordable- housing-goals- and-the-collapse -of-fannie- mae-debunking- the-myth/
Daniel
Tue Feb 18, 2014 7:27 am (PST) . Posted by:
"dfitchett"
Dick,
One might suggest amplifying your observation "There are allegations that minorities were charged higher rates and given tougher terms for loans made during this period" with the caveat "but often still not sufficiently adjusted upward by mortgage lending institutions to reflect the possible higher risk that some such borrowers would face difficulty in properly servicing these loans and possibly even default on these loans". E.g., so-called "ninja" (no income, no job/assets) loans.
An even more curious case relates the authorities&# 39; (mainly the Department of Justice) use of "disparate impact analysis" , which appears to argue that even if minorities were not "charged higher rates and given tougher terms for loans" by mortgage lending institutions, the borrowers really didn't qualify for the same relatively favorable lending terms and conditions as provided by mortgage lending institutions to more creditworthy borrowers. I believe that several big banks/mortgage lending institutions have had to page fines for this "infraction&qu ot;. (Even though the lending institutions claim that they thought they were complying with the provision of the laws with respect to "redlining&quo t;, nondiscrimination in lending or the "fair housing standards" legislation. )
Of course, as you point out, the mortgage lending institutions thought they were accommodating "government policies to stimulate home ownership, including relaxed credit underwriting" .
So much time in Washington reminds me of Puck's line in Act 3, Scene 2 of Shakespeare&# 39;s "A Midsummer' s Night Dream:
"Lord, what fools these mortals be!"
Del
----- Original Message -----
From: Meyer, Richard
To: MicrofinancePractic e@yahoogroups. com
Sent: Monday, February 17, 2014 9:22 PM
Subject: [MFP] RE: The Equal Credit Opportunity Act / USA
You probably know that there has been a large debate over the years in the US about redlining, the practice of outlining geographic areas of housing (may be poor, deteriorated, occupied by minorities) and make fewer or no loans within those areas. There have been many attempts to measure the phenomena, and reduce the problem through various means when it is found. I do not know about the current state of the research regarding the issue. It is argued that government policies to stimulate home ownership, including relaxed credit underwriting, is one of the causes behind the financial collapse a few years ago. There are allegations that minorities were charged higher rates and given tougher terms for loans made during this period. Dick
From: MicrofinancePractic e@yahoogroups. com [mailto:MicrofinancePractic e@yahoogroups. com] On Behalf Of Anuj Jain
Sent: Monday, February 17, 2014 10:59 AM
To: MicrofinancePractic e@yahoogroups. com
Subject: [MFP] The Equal Credit Opportunity Act / USA
We in the sector have often talked and debated about 'right to capital or a loan', and if that is indeed a right, or is rather a privilege that one must earn by building one's credit worthiness. Some years ago, Prof. Yunus had created quite a debate by saying that it can be considered as a fundamental right.
Regardless of that debate, here is this example, from USA, of this Equal Credit Opportunity Act; which does not give a right to borrow, but at the same time, stops the lending institutions from discriminating against any group of people or individual for accessing credit.
Federal Fair Lending Regulations and Statutes
Equal Credit Opportunity
The Equal Credit Opportunity Act (ECOA) of 1974, which is implemented by the Board's Regulation B, applies to all creditors. The statute requires financial institutions and other firms engaged in the extension of credit to ''make credit equally available to all creditworthy customers without regard to sex or marital status.' ' Moreover, the statute makes it unlawful for ''any creditor to discriminate against any applicant with respect to any aspect of a credit transaction (1) on the basis of race, color, religion, national origin, sex or marital status, or age (provided the applicant has the capacity to contract); (2) because all or part of the applicant' s income derives from any public assistance program; or (3) because the applicant has in good faith exercised any right under the Consumer Credit Protection Act.''
Read on for more details.
http://www.federalr eserve.gov/ boarddocs/ supmanual/ cch/fair_ lend_reg_ b.pdf
I wonder if such / similar laws exist in other countries; and what have been practical implications of this Act in USA? Will look forward to hear back.
Best,
anuj
Anuj K. Jain
Sr. Coady Fellow| Microfinance and Development| COADY International Institute
St. Francis Xavier University, Antigonish, Nova Scotia, B2G 2W5| Ph: 902-872-0521
One might suggest amplifying your observation "There are allegations that minorities were charged higher rates and given tougher terms for loans made during this period" with the caveat "but often still not sufficiently adjusted upward by mortgage lending institutions to reflect the possible higher risk that some such borrowers would face difficulty in properly servicing these loans and possibly even default on these loans". E.g., so-called "ninja" (no income, no job/assets) loans.
An even more curious case relates the authorities&# 39; (mainly the Department of Justice) use of "disparate impact analysis" , which appears to argue that even if minorities were not "charged higher rates and given tougher terms for loans" by mortgage lending institutions, the borrowers really didn't qualify for the same relatively favorable lending terms and conditions as provided by mortgage lending institutions to more creditworthy borrowers. I believe that several big banks/mortgage lending institutions have had to page fines for this "infraction&qu ot;. (Even though the lending institutions claim that they thought they were complying with the provision of the laws with respect to "redlining&quo t;, nondiscrimination in lending or the "fair housing standards" legislation. )
Of course, as you point out, the mortgage lending institutions thought they were accommodating "government policies to stimulate home ownership, including relaxed credit underwriting" .
So much time in Washington reminds me of Puck's line in Act 3, Scene 2 of Shakespeare&# 39;s "A Midsummer' s Night Dream:
"Lord, what fools these mortals be!"
Del
----- Original Message -----
From: Meyer, Richard
To: MicrofinancePractic e@yahoogroups. com
Sent: Monday, February 17, 2014 9:22 PM
Subject: [MFP] RE: The Equal Credit Opportunity Act / USA
You probably know that there has been a large debate over the years in the US about redlining, the practice of outlining geographic areas of housing (may be poor, deteriorated, occupied by minorities) and make fewer or no loans within those areas. There have been many attempts to measure the phenomena, and reduce the problem through various means when it is found. I do not know about the current state of the research regarding the issue. It is argued that government policies to stimulate home ownership, including relaxed credit underwriting, is one of the causes behind the financial collapse a few years ago. There are allegations that minorities were charged higher rates and given tougher terms for loans made during this period. Dick
From: MicrofinancePractic e@yahoogroups. com [mailto:MicrofinancePractic e@yahoogroups. com] On Behalf Of Anuj Jain
Sent: Monday, February 17, 2014 10:59 AM
To: MicrofinancePractic e@yahoogroups. com
Subject: [MFP] The Equal Credit Opportunity Act / USA
We in the sector have often talked and debated about 'right to capital or a loan', and if that is indeed a right, or is rather a privilege that one must earn by building one's credit worthiness. Some years ago, Prof. Yunus had created quite a debate by saying that it can be considered as a fundamental right.
Regardless of that debate, here is this example, from USA, of this Equal Credit Opportunity Act; which does not give a right to borrow, but at the same time, stops the lending institutions from discriminating against any group of people or individual for accessing credit.
Federal Fair Lending Regulations and Statutes
Equal Credit Opportunity
The Equal Credit Opportunity Act (ECOA) of 1974, which is implemented by the Board's Regulation B, applies to all creditors. The statute requires financial institutions and other firms engaged in the extension of credit to ''make credit equally available to all creditworthy customers without regard to sex or marital status.' ' Moreover, the statute makes it unlawful for ''any creditor to discriminate against any applicant with respect to any aspect of a credit transaction (1) on the basis of race, color, religion, national origin, sex or marital status, or age (provided the applicant has the capacity to contract); (2) because all or part of the applicant' s income derives from any public assistance program; or (3) because the applicant has in good faith exercised any right under the Consumer Credit Protection Act.''
Read on for more details.
http://www.federalr eserve.gov/ boarddocs/ supmanual/ cch/fair_ lend_reg_ b.pdf
I wonder if such / similar laws exist in other countries; and what have been practical implications of this Act in USA? Will look forward to hear back.
Best,
anuj
Anuj K. Jain
Sr. Coady Fellow| Microfinance and Development| COADY International Institute
St. Francis Xavier University, Antigonish, Nova Scotia, B2G 2W5| Ph: 902-872-0521
Tue Feb 18, 2014 7:47 am (PST) . Posted by:
"Charlie Rock"
Starting in the early 2000s the NCRC (National Community Reinvestment Coalition) annual meetings had sessions discussed the problem with predatory lending practices. I have on my computer the record of me signing a petition intitiated by the NCRC to send to Fed Chair Alan Greenspan in 2003 (March) calling on the Federal Reserve to look into the bad (for borrowers) practices being followed in many communities. There was no response from this believer in markets and company self-discipline.
The NCRC supported widespread homeownership, but never wished for it to be achieved by this sort of predation (that did occur both for Alt-A and Subprime loans) that would ensure problems for poor households (and others) at some point in their repayment-years. The banks and mortgage brokers claimed to be carrying out policies urged by Democrats and others, but failed to do it in a manner consistent with traditional 'conservative&# 39; mortgage lending. The story from some, is that the fault lay with the advocates of low income household ownership, but at that time few of these advocates urged lending to poor people under any terms as were done by many mortgage brokers and backed up by major banks.
Charlie Rock
Winter Park, FL
____________ _________ _________ __
From: MicrofinancePractic e@yahoogroups. com <MicrofinancePractic e@yahoogroups. com> on behalf of dfitchett <DFitchett@msn. com>
Sent: Tuesday, February 18, 2014 10:26
To: MicrofinancePractic e@yahoogroups. com
Subject: Re: [MFP] RE: The Equal Credit Opportunity Act / USA
Dick,
One might suggest amplifying your observation "There are allegations that minorities were charged higher rates and given tougher terms for loans made during this period" with the caveat "but often still not sufficiently adjusted upward by mortgage lending institutions to reflect the possible higher risk that some such borrowers would face difficulty in properly servicing these loans and possibly even default on these loans". E.g., so-called "ninja" (no income, no job/assets) loans.
An even more curious case relates the authorities&# 39; (mainly the Department of Justice) use of "disparate impact analysis" , which appears to argue that even if minorities were not "charged higher rates and given tougher terms for loans" by mortgage lending institutions, the borrowers really didn't qualify for the same relatively favorable lending terms and conditions as provided by mortgage lending institutions to more creditworthy borrowers. I believe that several big banks/mortgage lending institutions have had to page fines for this "infraction&qu ot;. (Even though the lending institutions claim that they thought they were complying with the provision of the laws with respect to "redlining&quo t;, nondiscrimination in lending or the "fair housing standards" legislation. )
Of course, as you point out, the mortgage lending institutions thought they were accommodating "government policies to stimulate home ownership, including relaxed credit underwriting" .
So much time in Washington reminds me of Puck's line in Act 3, Scene 2 of Shakespeare&# 39;s "A Midsummer' s Night Dream:
"Lord, what fools these mortals be!"
Del
----- Original Message -----
From: Meyer, Richard<mailto:meyer.19@osu. edu>
To: MicrofinancePractic e@yahoogroups. com<mailto:MicrofinancePractic e@yahoogroups. com>
Sent: Monday, February 17, 2014 9:22 PM
Subject: [MFP] RE: The Equal Credit Opportunity Act / USA
You probably know that there has been a large debate over the years in the US about redlining, the practice of outlining geographic areas of housing (may be poor, deteriorated, occupied by minorities) and make fewer or no loans within those areas. There have been many attempts to measure the phenomena, and reduce the problem through various means when it is found. I do not know about the current state of the research regarding the issue. It is argued that government policies to stimulate home ownership, including relaxed credit underwriting, is one of the causes behind the financial collapse a few years ago. There are allegations that minorities were charged higher rates and given tougher terms for loans made during this period. Dick
From: MicrofinancePractic e@yahoogroups. com [mailto:MicrofinancePractic e@yahoogroups. com] On Behalf Of Anuj Jain
Sent: Monday, February 17, 2014 10:59 AM
To: MicrofinancePractic e@yahoogroups. com
Subject: [MFP] The Equal Credit Opportunity Act / USA
We in the sector have often talked and debated about 'right to capital or a loan', and if that is indeed a right, or is rather a privilege that one must earn by building one's credit worthiness. Some years ago, Prof. Yunus had created quite a debate by saying that it can be considered as a fundamental right.
Regardless of that debate, here is this example, from USA, of this Equal Credit Opportunity Act; which does not give a right to borrow, but at the same time, stops the lending institutions from discriminating against any group of people or individual for accessing credit.
Federal Fair Lending Regulations and Statutes
Equal Credit Opportunity
The Equal Credit Opportunity Act (ECOA) of 1974, which is implemented by the Board's Regulation B, applies to all creditors. The statute requires financial institutions and other firms engaged in the extension of credit to ''make credit equally available to all creditworthy customers without regard to sex or marital status.' ' Moreover, the statute makes it unlawful for ''any creditor to discriminate against any applicant with respect to any aspect of a credit transaction (1) on the basis of race, color, religion, national origin, sex or marital status, or age (provided the applicant has the capacity to contract); (2) because all or part of the applicant' s income derives from any public assistance program; or (3) because the applicant has in good faith exercised any right under the Consumer Credit Protection Act.''
Read on for more details...
http://www.federalr eserve.gov/ boarddocs/ supmanual/ cch/fair_ lend_reg_ b.pdf
I wonder if such / similar laws exist in other countries; and what have been practical implications of this Act in USA? Will look forward to hear back.
Best,
anuj
Anuj K. Jain
Sr. Coady Fellow| Microfinance and Development| COADY International Institute
St. Francis Xavier University, Antigonish, Nova Scotia, B2G 2W5| Ph: 902-872-0521
[cid:image001.jpg@ 01CADFB8. 12862C40]
The NCRC supported widespread homeownership, but never wished for it to be achieved by this sort of predation (that did occur both for Alt-A and Subprime loans) that would ensure problems for poor households (and others) at some point in their repayment-years. The banks and mortgage brokers claimed to be carrying out policies urged by Democrats and others, but failed to do it in a manner consistent with traditional 'conservative&# 39; mortgage lending. The story from some, is that the fault lay with the advocates of low income household ownership, but at that time few of these advocates urged lending to poor people under any terms as were done by many mortgage brokers and backed up by major banks.
Charlie Rock
Winter Park, FL
____________ _________ _________ __
From: MicrofinancePractic e@yahoogroups. com <MicrofinancePractic e@yahoogroups. com> on behalf of dfitchett <DFitchett@msn. com>
Sent: Tuesday, February 18, 2014 10:26
To: MicrofinancePractic e@yahoogroups. com
Subject: Re: [MFP] RE: The Equal Credit Opportunity Act / USA
Dick,
One might suggest amplifying your observation "There are allegations that minorities were charged higher rates and given tougher terms for loans made during this period" with the caveat "but often still not sufficiently adjusted upward by mortgage lending institutions to reflect the possible higher risk that some such borrowers would face difficulty in properly servicing these loans and possibly even default on these loans". E.g., so-called "ninja" (no income, no job/assets) loans.
An even more curious case relates the authorities&# 39; (mainly the Department of Justice) use of "disparate impact analysis" , which appears to argue that even if minorities were not "charged higher rates and given tougher terms for loans" by mortgage lending institutions, the borrowers really didn't qualify for the same relatively favorable lending terms and conditions as provided by mortgage lending institutions to more creditworthy borrowers. I believe that several big banks/mortgage lending institutions have had to page fines for this "infraction&qu ot;. (Even though the lending institutions claim that they thought they were complying with the provision of the laws with respect to "redlining&quo t;, nondiscrimination in lending or the "fair housing standards" legislation. )
Of course, as you point out, the mortgage lending institutions thought they were accommodating "government policies to stimulate home ownership, including relaxed credit underwriting" .
So much time in Washington reminds me of Puck's line in Act 3, Scene 2 of Shakespeare&# 39;s "A Midsummer' s Night Dream:
"Lord, what fools these mortals be!"
Del
----- Original Message -----
From: Meyer, Richard<mailto:meyer.19@osu. edu>
To: MicrofinancePractic e@yahoogroups. com<mailto:MicrofinancePractic e@yahoogroups. com>
Sent: Monday, February 17, 2014 9:22 PM
Subject: [MFP] RE: The Equal Credit Opportunity Act / USA
You probably know that there has been a large debate over the years in the US about redlining, the practice of outlining geographic areas of housing (may be poor, deteriorated, occupied by minorities) and make fewer or no loans within those areas. There have been many attempts to measure the phenomena, and reduce the problem through various means when it is found. I do not know about the current state of the research regarding the issue. It is argued that government policies to stimulate home ownership, including relaxed credit underwriting, is one of the causes behind the financial collapse a few years ago. There are allegations that minorities were charged higher rates and given tougher terms for loans made during this period. Dick
From: MicrofinancePractic e@yahoogroups. com [mailto:MicrofinancePractic e@yahoogroups. com] On Behalf Of Anuj Jain
Sent: Monday, February 17, 2014 10:59 AM
To: MicrofinancePractic e@yahoogroups. com
Subject: [MFP] The Equal Credit Opportunity Act / USA
We in the sector have often talked and debated about 'right to capital or a loan', and if that is indeed a right, or is rather a privilege that one must earn by building one's credit worthiness. Some years ago, Prof. Yunus had created quite a debate by saying that it can be considered as a fundamental right.
Regardless of that debate, here is this example, from USA, of this Equal Credit Opportunity Act; which does not give a right to borrow, but at the same time, stops the lending institutions from discriminating against any group of people or individual for accessing credit.
Federal Fair Lending Regulations and Statutes
Equal Credit Opportunity
The Equal Credit Opportunity Act (ECOA) of 1974, which is implemented by the Board's Regulation B, applies to all creditors. The statute requires financial institutions and other firms engaged in the extension of credit to ''make credit equally available to all creditworthy customers without regard to sex or marital status.' ' Moreover, the statute makes it unlawful for ''any creditor to discriminate against any applicant with respect to any aspect of a credit transaction (1) on the basis of race, color, religion, national origin, sex or marital status, or age (provided the applicant has the capacity to contract); (2) because all or part of the applicant' s income derives from any public assistance program; or (3) because the applicant has in good faith exercised any right under the Consumer Credit Protection Act.''
Read on for more details...
http://www.federalr eserve.gov/ boarddocs/ supmanual/ cch/fair_ lend_reg_ b.pdf
I wonder if such / similar laws exist in other countries; and what have been practical implications of this Act in USA? Will look forward to hear back.
Best,
anuj
Anuj K. Jain
Sr. Coady Fellow| Microfinance and Development| COADY International Institute
St. Francis Xavier University, Antigonish, Nova Scotia, B2G 2W5| Ph: 902-872-0521
[cid:image001.jpg@ 01CADFB8. 12862C40]
Tue Feb 18, 2014 8:15 am (PST) . Posted by:
"M" jeffreyashe02139
Anuj,
Just to add to what Bill mentioned about New Bedford, in Lowell we were unable to introduce Working Capital to the large Cambodian population because they were using the savings and lending and mutual support traditions they brought with them. How can these support mechanisms be strengthened and expanded in the communities where they are already functioning and can they be introduced to communities where these traditions do not exist or exist in a very rudimentary form? What can we learn from promoting Savings Groups in Africa and Latin America to bring to this country? Bill and I working through the University of New Hampshire' s Carsey Institute aim to find out. Those who are part of these groups have a better chance of moving up the economic ladder in a generation not because they receive help from outsiders but by taking care of their own.
Jeff
Jeffrey Ashe
jaashe@aol.com
-----Original Message-----
From: wmaddocks <wmaddocks@gmail. com>
To: MicrofinancePractic e <MicrofinancePractic e@yahoogroups. com>
Sent: Tue, Feb 18, 2014 9:55 am
Subject: [MFP] RE: The Equal Credit Opportunity Act / USA
Hi Anuj,
While the mortgage default issue has now shifted to the "jumbo loan" end of the market its because many of the lower income people who got mortgages prior to 2009 have already defaulted. As we know the subprime mortgage debacle had the disastrous effect of making too much credit available to too many people and often in the same neighborhoods that had been previously red lined. According to a report on NPR last May more than half the wealth in Black and Latino communities was erased by the banking crisis which has left millions underwater with mortgages bigger than their houses are worth and little to no relief from the banks or the federal government. I always disagreed with the "credit as a human right" concept. Why should being in debt be anyone's sacred right?
Its ironic that in Latino and other immigrant communities informal savings-based arrangements made it possible for many to buy houses when prices were not so inflated and employment was more prevalent. I worked in a predominantly Portuguese immigrant community for two decades and saw "saving up" and pooled savings among family members the primary source of credit since the banks were not interested in extending credit to immigrants.Back in the 90's Jeff Ashe and I tried to bring the Working Capital peer lending concept to New Bedford' s Portuguese fisherman they weren't interested because they already had access to credit from community funds family members had assiduously saved.
I be curious to know how many minority and immigrant communities in the U.S. are still using savings-based financial tools in this post-banking crisis era?
Bill
Tue Feb 18, 2014 8:34 am (PST) . Posted by:
"Normand Arsenault" normand_micro
For your information:
WELLS FARGO EDGES BACK INTO SUBPRIME AS US MORTGAGE MARKET THAWS
CNBC News - 14 Feb 2014
http://www.cnbc. com/id/101417200
WELLS FARGO EDGES BACK INTO SUBPRIME AS U.S. MORTGAGE MARKET THAWS
REUTERS - 14 Feb 2014
http://www.reuters. com/article/ 2014/02/14/ us-banks- subprime- insight-idUSBREA
1D07820140214
Subprime lending is back in the US. To avoid the taint associated with the
word "subprime, " lenders are calling their loans "another chance mortgages"
or "alternative mortgage programs."
Tue Feb 18, 2014 10:07 am (PST) . Posted by:
"Anuj Jain" jainanuj
Resending; for some reason, this did not go through the first time. apologies for the duplication.
anuj
From: Anuj Jain
Sent: Tuesday, February 18, 2014 11:48 AM
To: MicrofinancePractic e@yahoogroups. com
Subject: RE: [MFP] RE: The Equal Credit Opportunity Act / USA
Great piece of information and analysis! Thanks Daniel.
And thanks Bill for your firsthand account of your engagement on this issue.
There is still a bit of un-clarity in my mind, and maybe you (Daniel) will have ready information on this as well. While your analysis clearly points out that for Fannie-Mae's portfolio, poor were not any more delinquent, and that their net effect on overall portfolio delinquency was relatively small (am I right in saying so?); was this also true for other players/ actors and in overall analysis?
And to you Bill, it will be great if you have any data that capture loss of asset value among the poor (by the way, what income levels were considered as poor?) due to either fore-closure or loss of housing values in the market or both? I don't think you are suggesting that marginalized groups should not rely on credit and should be happy only with their savings-up; but your note inadvertently may be suggesting so. But I hope I am not reading it wrong.
From these inputs ( also yours Del), can we say that the Equal Credit Opportunity Act, while great in intention; have had limited impact on more equitable and fair lending practices in US; and the lending institutions perhaps continue to profile their clients in different risk categories, without supporting evidence? On the other hand, is there an easy way to get to the data of how many low-income housing loans were indeed successfully given out and recovered – perhaps contributing to greater access to housing overall, over 1970-90s?
While I was aware of ECOA earlier, I had not fully realized potential positive impact of such a legislation; which despite its limitations in execution, can be a basis for limiting prejudice. Or is that a wishful deduction?
Thanks, it has been very educational!
anuj
From: MicrofinancePractic e@yahoogroups. com<mailto:MicrofinancePractic e@yahoogroups. com> [mailto:MicrofinancePractic e@yahoogroups. com] On Behalf Of danrozas@yahoo. com<mailto:danrozas@yahoo. com>
Sent: Tuesday, February 18, 2014 10:55 AM
To: MicrofinancePractic e@yahoogroups. com<mailto:MicrofinancePractic e@yahoogroups. com>
Subject: [MFP] RE: The Equal Credit Opportunity Act / USA
Thanks Dick -- indeed, there's much to explain. The article provides some background -- I'd post the text here, but it's really dependent on referencing the graphs in the blog...
Anyway, briefly, Alt-A loans are best described as loans to people with reasonably high credit scores (i.e. good credit history), but the loans had other risky characteristics -- lower requirements for income documentation, for example, higher leverage, interest-only repayment periods, etc. Before the crisis, the repayment rates on these loans were only slightly lower than prime loans (i.e. highest quality loans), but they really tanked once the mortgage market collapsed. Take a look at the blog, which goes into more detail:
http://www.danielro zas.com /housing/2012/ 06/11/affordable -housing- goals-and- the-collapse- of-fannie- mae-debunking- the-myth/ <http://www.danielro zas.com/housing/ 2012/06/11/ affordable- housing-goals- and-the-collapse -of-fannie- mae-debunking- the-myth/>
Daniel
anuj
From: Anuj Jain
Sent: Tuesday, February 18, 2014 11:48 AM
To: MicrofinancePractic e@yahoogroups. com
Subject: RE: [MFP] RE: The Equal Credit Opportunity Act / USA
Great piece of information and analysis! Thanks Daniel.
And thanks Bill for your firsthand account of your engagement on this issue.
There is still a bit of un-clarity in my mind, and maybe you (Daniel) will have ready information on this as well. While your analysis clearly points out that for Fannie-Mae's portfolio, poor were not any more delinquent, and that their net effect on overall portfolio delinquency was relatively small (am I right in saying so?); was this also true for other players/ actors and in overall analysis?
And to you Bill, it will be great if you have any data that capture loss of asset value among the poor (by the way, what income levels were considered as poor?) due to either fore-closure or loss of housing values in the market or both? I don't think you are suggesting that marginalized groups should not rely on credit and should be happy only with their savings-up; but your note inadvertently may be suggesting so. But I hope I am not reading it wrong.
From these inputs ( also yours Del), can we say that the Equal Credit Opportunity Act, while great in intention; have had limited impact on more equitable and fair lending practices in US; and the lending institutions perhaps continue to profile their clients in different risk categories, without supporting evidence? On the other hand, is there an easy way to get to the data of how many low-income housing loans were indeed successfully given out and recovered – perhaps contributing to greater access to housing overall, over 1970-90s?
While I was aware of ECOA earlier, I had not fully realized potential positive impact of such a legislation; which despite its limitations in execution, can be a basis for limiting prejudice. Or is that a wishful deduction?
Thanks, it has been very educational!
anuj
From: MicrofinancePractic e@yahoogroups. com<mailto:MicrofinancePractic e@yahoogroups. com> [mailto:MicrofinancePractic e@yahoogroups. com] On Behalf Of danrozas@yahoo. com<mailto:danrozas@yahoo. com>
Sent: Tuesday, February 18, 2014 10:55 AM
To: MicrofinancePractic e@yahoogroups. com<mailto:MicrofinancePractic e@yahoogroups. com>
Subject: [MFP] RE: The Equal Credit Opportunity Act / USA
Thanks Dick -- indeed, there's much to explain. The article provides some background -- I'd post the text here, but it's really dependent on referencing the graphs in the blog...
Anyway, briefly, Alt-A loans are best described as loans to people with reasonably high credit scores (i.e. good credit history), but the loans had other risky characteristics -- lower requirements for income documentation, for example, higher leverage, interest-only repayment periods, etc. Before the crisis, the repayment rates on these loans were only slightly lower than prime loans (i.e. highest quality loans), but they really tanked once the mortgage market collapsed. Take a look at the blog, which goes into more detail:
http://www.danielro zas.com /housing/2012/ 06/11/affordable -housing- goals-and- the-collapse- of-fannie- mae-debunking- the-myth/ <http://www.danielro zas.com/housing/ 2012/06/11/ affordable- housing-goals- and-the-collapse -of-fannie- mae-debunking- the-myth/>
Daniel
Tue Feb 18, 2014 10:29 am (PST) . Posted by:
"dfitchett"
It would be interesting to know how the definition of "conforming loan" (i.e., mortgages which conform to certain standards and requirements in order to be eligible to be purchased by Fannie, Freddie, Federal Home Loan Bank, Farmer Mac and other GSEs) may have changed over the last twelve-fifteen years.
For instance, currently the FHFA's maximum conforming loan size for a single family unit is $417,000, except for about 60 or 70
"Metropolitan Statistical Areas, Micropolitan Statistical Areas and Rural Counties" in the Continental United States, Alaska, Hawaii, Guam and U.S. Virgin Islands,where maximum conforming loan limits for mortgages acquired in 2014 by FHFA agencies may exceed $417,000, and go up to $625,500. ( http://www.fhfa. gov/Default. aspx?Page= 185 )
In "Alice in Wonderland" isn't there a line from the Queen about words meaning what she wants them to mean?
Del
----- Original Message -----
From: Normand Arsenault
To: MicrofinancePractic e@yahoogroups. com
Sent: Tuesday, February 18, 2014 11:32 AM
Subject: RE: [MFP] RE: The Equal Credit Opportunity Act / USA
For your information:
WELLS FARGO EDGES BACK INTO SUBPRIME AS US MORTGAGE MARKET THAWS
CNBC News - 14 Feb 2014
http://www.cnbc. com/id/101417200
WELLS FARGO EDGES BACK INTO SUBPRIME AS U.S. MORTGAGE MARKET THAWS
REUTERS - 14 Feb 2014
http://www.reuters. com/article/ 2014/02/14/ us-banks- subprime- insight-idUSBREA 1D07820140214
Subprime lending is back in the US. To avoid the taint associated with the word "subprime, " lenders are calling their loans "another chance mortgages" or "alternative mortgage programs."
For instance, currently the FHFA's maximum conforming loan size for a single family unit is $417,000, except for about 60 or 70
"Metropolitan Statistical Areas, Micropolitan Statistical Areas and Rural Counties" in the Continental United States, Alaska, Hawaii, Guam and U.S. Virgin Islands,where maximum conforming loan limits for mortgages acquired in 2014 by FHFA agencies may exceed $417,000, and go up to $625,500. ( http://www.fhfa. gov/Default. aspx?Page= 185 )
In "Alice in Wonderland" isn't there a line from the Queen about words meaning what she wants them to mean?
Del
----- Original Message -----
From: Normand Arsenault
To: MicrofinancePractic e@yahoogroups. com
Sent: Tuesday, February 18, 2014 11:32 AM
Subject: RE: [MFP] RE: The Equal Credit Opportunity Act / USA
For your information:
WELLS FARGO EDGES BACK INTO SUBPRIME AS US MORTGAGE MARKET THAWS
CNBC News - 14 Feb 2014
http://www.cnbc. com/id/101417200
WELLS FARGO EDGES BACK INTO SUBPRIME AS U.S. MORTGAGE MARKET THAWS
REUTERS - 14 Feb 2014
http://www.reuters. com/article/ 2014/02/14/ us-banks- subprime- insight-idUSBREA 1D07820140214
Subprime lending is back in the US. To avoid the taint associated with the word "subprime, " lenders are calling their loans "another chance mortgages" or "alternative mortgage programs."
Tue Feb 18, 2014 6:40 am (PST) . Posted by:
"William Maddocks" williamomaddocks
Dick and Anuj,
The subprime mortgage debacle had the disastrous effect of making too much
credit available to too many people and often in the same neighborhoods
that had previously red lined. According to a report on NPR last May more
than half the wealth in Black and Latino communities was erased by the
banking crisis which has left millions underwater with mortgages bigger
than their houses are worth and little to no relief from the banks or the
federal government. I always disagreed with the "credit as a human right"
concept. Why should being in debt be anyone's sacred right?
Its ironic that in Latino and other immigrant communities informal
savings-based arrangements made it possible for many to buy houses when
prices were not so inflated and employment was more prevalent. I worked in
a predominantly Portuguese immigrant community for two decades and saw
"saving up" and pooled savings among family members the primary source of
credit since the banks were not interested in extending credit to
immigrants.Back in the 90's Jeff Ashe and I tried to bring the Working
Capital peer lending concept to New Bedford' s Portuguese fisherman they
weren't interested because they already had access to credit from community
funds family members had assiduously saved.
Bill
On Tue, Feb 18, 2014 at 8:32 AM, <MicrofinancePractic e@yahoogroups. com>wrote:
> [image: Yahoo! Groups] <http://groups. yahoo.com/ ;_ylc=X3oDMTJkY2 pmOWZvBF9TAzk3Mz U5NzE1BGdycElkAz MyNDAyNjQEZ3Jwc3 BJZAMxNzA1MDAxMj QyBHNlYwNmdHIEc2 xrA2dmcARzdGltZQ MxMzkyNzMwMzU5>
> Microfinance Practice Group <http://groups. yahoo.com/ group/Microfinan cePractice; _ylc=X3oDMTJkOXM xNmkyBF9TAzk3MzU 5NzE1BGdycElkAzM yNDAyNjQEZ3Jwc3B JZAMxNzA1MDAxMjQ yBHNlYwNoZHIEc2x rA2hwaARzdGltZQM xMzkyNzMwMzU5>
> 3 Messages
> Digest #3717
> 1a
> The Equal Credit Opportunity Act / USA <#1444532d5498b8 30_1a> by "Anuj
> Jain" jainanuj
> 1b
> Re: The Equal Credit Opportunity Act / USA <#1444532d5498b8 30_1b> by
> "Meyer, Richard"
> 1c
> Re: The Equal Credit Opportunity Act / USA <#1444532d5498b8 30_1c> by
> "Anuj Jain" jainanuj
>
> Messages
> 1a The Equal Credit Opportunity Act / USA <http://groups. yahoo.com/ group/Microfinan cePractice/ message/15053; _ylc=X3oDMTJyYmk 4ZWxqBF9TAzk3MzU 5NzE1BGdycElkAzM yNDAyNjQEZ3Jwc3B JZAMxNzA1MDAxMjQ yBG1zZ0lkAzE1MDU zBHNlYwNkbXNnBHN sawN2bXNnBHN0aW1 lAzEzOTI3MzAzNTk ->
> Mon Feb 17, 2014 8:20 am (PST) . Posted by: "Anuj Jain" jainanuj <ajain@stfx.ca?subject=Re% 3A%20The% 20Equal%20Credit %20Opportunity% 20Act%20% 2F%20USA>
>
>
> We in the sector have often talked and debated about 'right to capital or
> a loan', and if that is indeed a right, or is rather a privilege that one
> must earn by building one's credit worthiness. Some years ago, Prof. Yunus
> had created quite a debate by saying that it can be considered as a
> fundamental right.
>
> Regardless of that debate, here is this example, from USA, of this Equal
> Credit Opportunity Act; which does not give a right to borrow, but at the
> same time, stops the lending institutions from discriminating against any
> group of people or individual for accessing credit.
>
> Federal Fair Lending Regulations and Statutes
> Equal Credit Opportunity
>
> The Equal Credit Opportunity Act (ECOA) of 1974, which is implemented by
> the Board's Regulation B, applies to all creditors. The statute requires
> financial institutions and other firms engaged in the extension of credit
> to ''make credit equally available to all creditworthy customers without
> regard to sex or marital status.' ' Moreover, the statute makes it
> unlawful for ''any creditor to discriminate against any applicant with
> respect to any aspect of a credit transaction (1) on the basis of race,
> color, religion, national origin, sex or marital status, or age (provided
> the applicant has the capacity to contract); (2) because all or part of the
> applicant' s income derives from any public assistance program; or (3)
> because the applicant has in good faith exercised any right under the
> Consumer Credit Protection Act.''
>
> Read on for more details...
> http://www.federalr eserve.gov/ boarddocs/ supmanual/ cch/fair_ lend_reg_ b.pdf
>
> I wonder if such / similar laws exist in other countries; and what have
> been practical implications of this Act in USA? Will look forward to hear
> back.
>
> Best,
> anuj
>
> Anuj K. Jain
> Sr. Coady Fellow| Microfinance and Development| COADY International
> Institute
> St. Francis Xavier University, Antigonish, Nova Scotia, B2G 2W5| Ph:
> 902-872-0521
> [cid:image001.jpg@ 01CF2BD5. 3B5DDFB0]
>
> Reply to sender <ajain@stfx.ca?subject=Re% 3A%20The% 20Equal%20Credit %20Opportunity% 20Act%20% 2F%20USA> . Reply to group <MicrofinancePractic e@yahoogroups. com?subject=Re% 3A%20The% 20Equal%20Credit %20Opportunity% 20Act%20% 2F%20USA> . Reply via Web Post <http://groups. yahoo.com/ group/Microfinan cePractice/ post;_ylc= X3oDMTJyZTM0bG5x BF9TAzk3MzU5NzE1 BGdycElkAzMyNDAy NjQEZ3Jwc3BJZAMx NzA1MDAxMjQyBG1z Z0lkAzE1MDUzBHNl YwNkbXNnBHNsawNy cGx5BHN0aW1lAzEz OTI3MzAzNTk- ?act=reply&messa geNum=15053> . All Messages (3) <http://groups. yahoo.com/ group/Microfinan cePractice/ message/15053; _ylc=X3oDMTM3cmV ub2xvBF9TAzk3MzU 5NzE1BGdycElkAzM yNDAyNjQEZ3Jwc3B JZAMxNzA1MDAxMjQ yBG1zZ0lkAzE1MDU zBHNlYwNkbXNnBHN sawN2dHBjBHN0aW1 lAzEzOTI3MzAzNTk EdHBjSWQDMTUwNTM -> . Top
> ^ <#1444532d5498b8 30_toc>
> 1b Re: The Equal Credit Opportunity Act / USA <http://groups. yahoo.com/ group/Microfinan cePractice/ message/15054; _ylc=X3oDMTJydWl udmNiBF9TAzk3MzU 5NzE1BGdycElkAzM yNDAyNjQEZ3Jwc3B JZAMxNzA1MDAxMjQ yBG1zZ0lkAzE1MDU 0BHNlYwNkbXNnBHN sawN2bXNnBHN0aW1 lAzEzOTI3MzAzNTk ->
> Mon Feb 17, 2014 6:22 pm (PST) . Posted by: "Meyer, Richard" <meyer.19@osu. edu?subject=Re% 3A%20The% 20Equal%20Credit %20Opportunity% 20Act%20% 2F%20USA>
> You probably know that there has been a large debate over the years in
> the US about redlining, the practice of outlining geographic areas of
> housing (may be poor, deteriorated, occupied by minorities) and make fewer
> or no loans within those areas. There have been many attempts to measure
> the phenomena, and reduce the problem through various means when it is
> found. I do not know about the current state of the research regarding the
> issue. It is argued that government policies to stimulate home ownership,
> including relaxed credit underwriting, is one of the causes behind the
> financial collapse a few years ago. There are allegations that minorities
> were charged higher rates and given tougher terms for loans made during
> this period. Dick
>
> From: MicrofinancePractic e@yahoogroups. com [mailto:Microfinanc ePractic
> e@yahoogroups. com] On Behalf Of Anuj Jain
> Sent: Monday, February 17, 2014 10:59 AM
> To: MicrofinancePractic e@yahoogroups. com
> Subject: [MFP] The Equal Credit Opportunity Act / USA
>
> We in the sector have often talked and debated about 'right to capital or
> a loan', and if that is indeed a right, or is rather a privilege that one
> must earn by building one's credit worthiness. Some years ago, Prof. Yunus
> had created quite a debate by saying that it can be considered as a
> fundamental right.
>
> Regardless of that debate, here is this example, from USA, of this Equal
> Credit Opportunity Act; which does not give a right to borrow, but at the
> same time, stops the lending institutions from discriminating against any
> group of people or individual for accessing credit.
>
> Federal Fair Lending Regulations and Statutes
> Equal Credit Opportunity
>
> The Equal Credit Opportunity Act (ECOA) of 1974, which is implemented by
> the Board's Regulation B, applies to all creditors. The statute requires
> financial institutions and other firms engaged in the extension of credit
> to ''make credit equally available to all creditworthy customers without
> regard to sex or marital status.' ' Moreover, the statute makes it
> unlawful for ''any creditor to discriminate against any applicant with
> respect to any aspect of a credit transaction (1) on the basis of race,
> color, religion, national origin, sex or marital status, or age (provided
> the applicant has the capacity to contract); (2) because all or part of the
> applicant' s income derives from any public assistance program; or (3)
> because the applicant has in good faith exercised any right under the
> Consumer Credit Protection Act.''
>
> Read on for more details...
> http://www.federalr eserve.gov/ boarddocs/ supmanual/ cch/fair_ lend_reg_ b.pdf
>
> I wonder if such / similar laws exist in other countries; and what have
> been practical implications of this Act in USA? Will look forward to hear
> back.
>
> Best,
> anuj
>
> Anuj K. Jain
> Sr. Coady Fellow| Microfinance and Development| COADY International
> Institute
> St. Francis Xavier University, Antigonish, Nova Scotia, B2G 2W5| Ph:
> 902-872-0521
> [cid:image001.jpg@ 01CADFB8. 12862C40]
>
> Reply to sender <meyer.19@osu. edu?subject=Re% 3A%20The% 20Equal%20Credit %20Opportunity% 20Act%20% 2F%20USA> . Reply to group <MicrofinancePractic e@yahoogroups. com?subject=Re% 3A%20The% 20Equal%20Credit %20Opportunity% 20Act%20% 2F%20USA> . Reply via Web Post <http://groups. yahoo.com/ group/Microfinan cePractice/ post;_ylc= X3oDMTJyN2d2cThs BF9TAzk3MzU5NzE1 BGdycElkAzMyNDAy NjQEZ3Jwc3BJZAMx NzA1MDAxMjQyBG1z Z0lkAzE1MDU0BHNl YwNkbXNnBHNsawNy cGx5BHN0aW1lAzEz OTI3MzAzNTk- ?act=reply&messa geNum=15054> . All Messages (3) <http://groups. yahoo.com/ group/Microfinan cePractice/ message/15053; _ylc=X3oDMTM3Zjh 1dXUwBF9TAzk3MzU 5NzE1BGdycElkAzM yNDAyNjQEZ3Jwc3B JZAMxNzA1MDAxMjQ yBG1zZ0lkAzE1MDU 0BHNlYwNkbXNnBHN sawN2dHBjBHN0aW1 lAzEzOTI3MzAzNTk EdHBjSWQDMTUwNTM -> . Top
> ^ <#1444532d5498b8 30_toc>
> 1c Re: The Equal Credit Opportunity Act / USA <http://groups. yahoo.com/ group/Microfinan cePractice/ message/15055; _ylc=X3oDMTJyajJ ob2J2BF9TAzk3MzU 5NzE1BGdycElkAzM yNDAyNjQEZ3Jwc3B JZAMxNzA1MDAxMjQ yBG1zZ0lkAzE1MDU 1BHNlYwNkbXNnBHN sawN2bXNnBHN0aW1 lAzEzOTI3MzAzNTk ->
> Tue Feb 18, 2014 4:05 am (PST) . Posted by: "Anuj Jain" jainanuj <ajain@stfx.ca?subject=Re% 3A%20The% 20Equal%20Credit %20Opportunity% 20Act%20% 2F%20USA>
> From my living in US during 2001-2005, I had some exposure to this
> debate, but must admit that I have not kept up on the subject since, except
> for the crisis in 2008 that was largely blamed on poor housing lending
> practices. Your brief analysis shows the double edginess of credit as a
> right. For Banks, damn if you do and damn if you don't. And yet, millions
> are excluded from capital access because of risk perception or prejudice,
> or both.
>
> May be the experience of US with 'equal opportunity&# 39; act (and other
> places where such acts may exist) would be worth studying further; as we
> encourage policies shift in other countries. Would AFI be a good custodian
> to look into this?
>
> Please do share if you can, anything else that may be available from US
> experience.
>
> Regards,
>
> Anuj
>
> p.s. in my brief read of recent reports that showed up on google search;
> those reports suggest two important points. a. proportion of current risk
> on high-end real-estate defaults is very substantial in US market (63%!),
> and b. most of the defaults on housing loans have shifted from sub-prime to
> prime borrowers (which means, those with high credit rating are higher
> percentage of defaulters) after 2009 due to rising unemployment. I would
> search for papers that show, what percentage of defaults came from
> lower-end housing market in 2006-2008; to know the 'poverty- default&# 39;
> correlation. This reading is certainly interesting because otherwise, the
> image that pops-up around sub-prime crisis is those poor black communities
> or migrant Latino population ; which unfortunately perhaps shows my own
> prejudice. The reality perhaps was very different and more complex.
>
> http://www.realtytr ac.com/content/ news-and- opinion/high- end-foreclosures
> -increasing- in-2013-bucking- national- trend-7945
>
> http://economistsvi ew.typepad. com/economistsvi ew/2012/03/ the-changing-
> face-of-foreclosure s.html
>
> http://t.www. na-businesspress .com/JAF/ GeanF_Web13_ 6_.pdf
>
> From: MicrofinancePractic e@yahoogroups. com [mailto:Microfinanc ePractic
> e@yahoogroups. com] On Behalf Of Meyer, Richard
> Sent: Monday, February 17, 2014 10:22 PM
> To: MicrofinancePractic e@yahoogroups. com
> Subject: [MFP] RE: The Equal Credit Opportunity Act / USA
>
> You probably know that there has been a large debate over the years in the
> US about redlining, the practice of outlining geographic areas of housing
> (may be poor, deteriorated, occupied by minorities) and make fewer or no
> loans within those areas. There have been many attempts to measure the
> phenomena, and reduce the problem through various means when it is found. I
> do not know about the current state of the research regarding the issue. It
> is argued that government policies to stimulate home ownership, including
> relaxed credit underwriting, is one of the causes behind the financial
> collapse a few years ago. There are allegations that minorities were
> charged higher rates and given tougher terms for loans made during this
> period. Dick
>
> From: MicrofinancePractic e@yahoogroups. com<mailto:Microfin ancePractic
> e@yahoogroups. com> [mailto:MicrofinancePractic e@yahoogroups. com] On
> Behalf Of Anuj Jain
> Sent: Monday, February 17, 2014 10:59 AM
> To: MicrofinancePractic e@yahoogroups. com<mailto:Microfin ancePractic
> e@yahoogroups. com>
> Subject: [MFP] The Equal Credit Opportunity Act / USA
>
> We in the sector have often talked and debated about 'right to capital or
> a loan', and if that is indeed a right, or is rather a privilege that one
> must earn by building one's credit worthiness. Some years ago, Prof. Yunus
> had created quite a debate by saying that it can be considered as a
> fundamental right.
>
> Regardless of that debate, here is this example, from USA, of this Equal
> Credit Opportunity Act; which does not give a right to borrow, but at the
> same time, stops the lending institutions from discriminating against any
> group of people or individual for accessing credit.
>
> Federal Fair Lending Regulations and Statutes
> Equal Credit Opportunity
>
> The Equal Credit Opportunity Act (ECOA) of 1974, which is implemented by
> the Board's Regulation B, applies to all creditors. The statute requires
> financial institutions and other firms engaged in the extension of credit
> to ''make credit equally available to all creditworthy customers without
> regard to sex or marital status.' ' Moreover, the statute makes it
> unlawful for ''any creditor to discriminate against any applicant with
> respect to any aspect of a credit transaction (1) on the basis of race,
> color, religion, national origin, sex or marital status, or age (provided
> the applicant has the capacity to contract); (2) because all or part of the
> applicant' s income derives from any public assistance program; or (3)
> because the applicant has in good faith exercised any right under the
> Consumer Credit Protection Act.''
>
> Read on for more details...
> http://www.federalr eserve.gov/ boarddocs/ supmanual/ cch/fair_ lend_reg_ b.pdf
>
> I wonder if such / similar laws exist in other countries; and what have
> been practical implications of this Act in USA? Will look forward to hear
> back.
>
> Best,
> anuj
>
> Anuj K. Jain
> Sr. Coady Fellow| Microfinance and Development| COADY International
> Institute
> St. Francis Xavier University, Antigonish, Nova Scotia, B2G 2W5| Ph:
> 902-872-0521
> [cid:image001.jpg@ 01CF2C73. F6E41E40]
>
> Reply to sender <ajain@stfx.ca?subject=Re% 3A%20The% 20Equal%20Credit %20Opportunity% 20Act%20% 2F%20USA> . Reply to group <MicrofinancePractic e@yahoogroups. com?subject=Re% 3A%20The% 20Equal%20Credit %20Opportunity% 20Act%20% 2F%20USA> . Reply via Web Post <http://groups. yahoo.com/ group/Microfinan cePractice/ post;_ylc= X3oDMTJyZWw5aWNs BF9TAzk3MzU5NzE1 BGdycElkAzMyNDAy NjQEZ3Jwc3BJZAMx NzA1MDAxMjQyBG1z Z0lkAzE1MDU1BHNl YwNkbXNnBHNsawNy cGx5BHN0aW1lAzEz OTI3MzAzNTk- ?act=reply&messa geNum=15055> . All Messages (3) <http://groups. yahoo.com/ group/Microfinan cePractice/ message/15053; _ylc=X3oDMTM3OTR oMmFmBF9TAzk3MzU 5NzE1BGdycElkAzM yNDAyNjQEZ3Jwc3B JZAMxNzA1MDAxMjQ yBG1zZ0lkAzE1MDU 1BHNlYwNkbXNnBHN sawN2dHBjBHN0aW1 lAzEzOTI3MzAzNTk EdHBjSWQDMTUwNTM -> . Top
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The subprime mortgage debacle had the disastrous effect of making too much
credit available to too many people and often in the same neighborhoods
that had previously red lined. According to a report on NPR last May more
than half the wealth in Black and Latino communities was erased by the
banking crisis which has left millions underwater with mortgages bigger
than their houses are worth and little to no relief from the banks or the
federal government. I always disagreed with the "credit as a human right"
concept. Why should being in debt be anyone's sacred right?
Its ironic that in Latino and other immigrant communities informal
savings-based arrangements made it possible for many to buy houses when
prices were not so inflated and employment was more prevalent. I worked in
a predominantly Portuguese immigrant community for two decades and saw
"saving up" and pooled savings among family members the primary source of
credit since the banks were not interested in extending credit to
immigrants.Back in the 90's Jeff Ashe and I tried to bring the Working
Capital peer lending concept to New Bedford' s Portuguese fisherman they
weren't interested because they already had access to credit from community
funds family members had assiduously saved.
Bill
On Tue, Feb 18, 2014 at 8:32 AM, <MicrofinancePractic e@yahoogroups. com>wrote:
> [image: Yahoo! Groups] <http://groups. yahoo.com/ ;_ylc=X3oDMTJkY2 pmOWZvBF9TAzk3Mz U5NzE1BGdycElkAz MyNDAyNjQEZ3Jwc3 BJZAMxNzA1MDAxMj QyBHNlYwNmdHIEc2 xrA2dmcARzdGltZQ MxMzkyNzMwMzU5>
> Microfinance Practice Group <http://groups. yahoo.com/ group/Microfinan cePractice; _ylc=X3oDMTJkOXM xNmkyBF9TAzk3MzU 5NzE1BGdycElkAzM yNDAyNjQEZ3Jwc3B JZAMxNzA1MDAxMjQ yBHNlYwNoZHIEc2x rA2hwaARzdGltZQM xMzkyNzMwMzU5>
> 3 Messages
> Digest #3717
> 1a
> The Equal Credit Opportunity Act / USA <#1444532d5498b8 30_1a> by "Anuj
> Jain" jainanuj
> 1b
> Re: The Equal Credit Opportunity Act / USA <#1444532d5498b8 30_1b> by
> "Meyer, Richard"
> 1c
> Re: The Equal Credit Opportunity Act / USA <#1444532d5498b8 30_1c> by
> "Anuj Jain" jainanuj
>
> Messages
> 1a The Equal Credit Opportunity Act / USA <http://groups. yahoo.com/ group/Microfinan cePractice/ message/15053; _ylc=X3oDMTJyYmk 4ZWxqBF9TAzk3MzU 5NzE1BGdycElkAzM yNDAyNjQEZ3Jwc3B JZAMxNzA1MDAxMjQ yBG1zZ0lkAzE1MDU zBHNlYwNkbXNnBHN sawN2bXNnBHN0aW1 lAzEzOTI3MzAzNTk ->
> Mon Feb 17, 2014 8:20 am (PST) . Posted by: "Anuj Jain" jainanuj <ajain@stfx.ca?subject=Re% 3A%20The% 20Equal%20Credit %20Opportunity% 20Act%20% 2F%20USA>
>
>
> We in the sector have often talked and debated about 'right to capital or
> a loan', and if that is indeed a right, or is rather a privilege that one
> must earn by building one's credit worthiness. Some years ago, Prof. Yunus
> had created quite a debate by saying that it can be considered as a
> fundamental right.
>
> Regardless of that debate, here is this example, from USA, of this Equal
> Credit Opportunity Act; which does not give a right to borrow, but at the
> same time, stops the lending institutions from discriminating against any
> group of people or individual for accessing credit.
>
> Federal Fair Lending Regulations and Statutes
> Equal Credit Opportunity
>
> The Equal Credit Opportunity Act (ECOA) of 1974, which is implemented by
> the Board's Regulation B, applies to all creditors. The statute requires
> financial institutions and other firms engaged in the extension of credit
> to ''make credit equally available to all creditworthy customers without
> regard to sex or marital status.' ' Moreover, the statute makes it
> unlawful for ''any creditor to discriminate against any applicant with
> respect to any aspect of a credit transaction (1) on the basis of race,
> color, religion, national origin, sex or marital status, or age (provided
> the applicant has the capacity to contract); (2) because all or part of the
> applicant' s income derives from any public assistance program; or (3)
> because the applicant has in good faith exercised any right under the
> Consumer Credit Protection Act.''
>
> Read on for more details...
> http://www.federalr eserve.gov/ boarddocs/ supmanual/ cch/fair_ lend_reg_ b.pdf
>
> I wonder if such / similar laws exist in other countries; and what have
> been practical implications of this Act in USA? Will look forward to hear
> back.
>
> Best,
> anuj
>
> Anuj K. Jain
> Sr. Coady Fellow| Microfinance and Development| COADY International
> Institute
> St. Francis Xavier University, Antigonish, Nova Scotia, B2G 2W5| Ph:
> 902-872-0521
> [cid:image001.jpg@ 01CF2BD5. 3B5DDFB0]
>
> Reply to sender <ajain@stfx.ca?subject=Re% 3A%20The% 20Equal%20Credit %20Opportunity% 20Act%20% 2F%20USA> . Reply to group <MicrofinancePractic e@yahoogroups. com?subject=Re% 3A%20The% 20Equal%20Credit %20Opportunity% 20Act%20% 2F%20USA> . Reply via Web Post <http://groups. yahoo.com/ group/Microfinan cePractice/ post;_ylc= X3oDMTJyZTM0bG5x BF9TAzk3MzU5NzE1 BGdycElkAzMyNDAy NjQEZ3Jwc3BJZAMx NzA1MDAxMjQyBG1z Z0lkAzE1MDUzBHNl YwNkbXNnBHNsawNy cGx5BHN0aW1lAzEz OTI3MzAzNTk- ?act=reply&messa geNum=15053> . All Messages (3) <http://groups. yahoo.com/ group/Microfinan cePractice/ message/15053; _ylc=X3oDMTM3cmV ub2xvBF9TAzk3MzU 5NzE1BGdycElkAzM yNDAyNjQEZ3Jwc3B JZAMxNzA1MDAxMjQ yBG1zZ0lkAzE1MDU zBHNlYwNkbXNnBHN sawN2dHBjBHN0aW1 lAzEzOTI3MzAzNTk EdHBjSWQDMTUwNTM -> . Top
> ^ <#1444532d5498b8 30_toc>
> 1b Re: The Equal Credit Opportunity Act / USA <http://groups. yahoo.com/ group/Microfinan cePractice/ message/15054; _ylc=X3oDMTJydWl udmNiBF9TAzk3MzU 5NzE1BGdycElkAzM yNDAyNjQEZ3Jwc3B JZAMxNzA1MDAxMjQ yBG1zZ0lkAzE1MDU 0BHNlYwNkbXNnBHN sawN2bXNnBHN0aW1 lAzEzOTI3MzAzNTk ->
> Mon Feb 17, 2014 6:22 pm (PST) . Posted by: "Meyer, Richard" <meyer.19@osu. edu?subject=Re% 3A%20The% 20Equal%20Credit %20Opportunity% 20Act%20% 2F%20USA>
> You probably know that there has been a large debate over the years in
> the US about redlining, the practice of outlining geographic areas of
> housing (may be poor, deteriorated, occupied by minorities) and make fewer
> or no loans within those areas. There have been many attempts to measure
> the phenomena, and reduce the problem through various means when it is
> found. I do not know about the current state of the research regarding the
> issue. It is argued that government policies to stimulate home ownership,
> including relaxed credit underwriting, is one of the causes behind the
> financial collapse a few years ago. There are allegations that minorities
> were charged higher rates and given tougher terms for loans made during
> this period. Dick
>
> From: MicrofinancePractic e@yahoogroups. com [mailto:Microfinanc ePractic
> e@yahoogroups. com] On Behalf Of Anuj Jain
> Sent: Monday, February 17, 2014 10:59 AM
> To: MicrofinancePractic e@yahoogroups. com
> Subject: [MFP] The Equal Credit Opportunity Act / USA
>
> We in the sector have often talked and debated about 'right to capital or
> a loan', and if that is indeed a right, or is rather a privilege that one
> must earn by building one's credit worthiness. Some years ago, Prof. Yunus
> had created quite a debate by saying that it can be considered as a
> fundamental right.
>
> Regardless of that debate, here is this example, from USA, of this Equal
> Credit Opportunity Act; which does not give a right to borrow, but at the
> same time, stops the lending institutions from discriminating against any
> group of people or individual for accessing credit.
>
> Federal Fair Lending Regulations and Statutes
> Equal Credit Opportunity
>
> The Equal Credit Opportunity Act (ECOA) of 1974, which is implemented by
> the Board's Regulation B, applies to all creditors. The statute requires
> financial institutions and other firms engaged in the extension of credit
> to ''make credit equally available to all creditworthy customers without
> regard to sex or marital status.' ' Moreover, the statute makes it
> unlawful for ''any creditor to discriminate against any applicant with
> respect to any aspect of a credit transaction (1) on the basis of race,
> color, religion, national origin, sex or marital status, or age (provided
> the applicant has the capacity to contract); (2) because all or part of the
> applicant' s income derives from any public assistance program; or (3)
> because the applicant has in good faith exercised any right under the
> Consumer Credit Protection Act.''
>
> Read on for more details...
> http://www.federalr eserve.gov/ boarddocs/ supmanual/ cch/fair_ lend_reg_ b.pdf
>
> I wonder if such / similar laws exist in other countries; and what have
> been practical implications of this Act in USA? Will look forward to hear
> back.
>
> Best,
> anuj
>
> Anuj K. Jain
> Sr. Coady Fellow| Microfinance and Development| COADY International
> Institute
> St. Francis Xavier University, Antigonish, Nova Scotia, B2G 2W5| Ph:
> 902-872-0521
> [cid:image001.jpg@ 01CADFB8. 12862C40]
>
> Reply to sender <meyer.19@osu. edu?subject=Re% 3A%20The% 20Equal%20Credit %20Opportunity% 20Act%20% 2F%20USA> . Reply to group <MicrofinancePractic e@yahoogroups. com?subject=Re% 3A%20The% 20Equal%20Credit %20Opportunity% 20Act%20% 2F%20USA> . Reply via Web Post <http://groups. yahoo.com/ group/Microfinan cePractice/ post;_ylc= X3oDMTJyN2d2cThs BF9TAzk3MzU5NzE1 BGdycElkAzMyNDAy NjQEZ3Jwc3BJZAMx NzA1MDAxMjQyBG1z Z0lkAzE1MDU0BHNl YwNkbXNnBHNsawNy cGx5BHN0aW1lAzEz OTI3MzAzNTk- ?act=reply&messa geNum=15054> . All Messages (3) <http://groups. yahoo.com/ group/Microfinan cePractice/ message/15053; _ylc=X3oDMTM3Zjh 1dXUwBF9TAzk3MzU 5NzE1BGdycElkAzM yNDAyNjQEZ3Jwc3B JZAMxNzA1MDAxMjQ yBG1zZ0lkAzE1MDU 0BHNlYwNkbXNnBHN sawN2dHBjBHN0aW1 lAzEzOTI3MzAzNTk EdHBjSWQDMTUwNTM -> . Top
> ^ <#1444532d5498b8 30_toc>
> 1c Re: The Equal Credit Opportunity Act / USA <http://groups. yahoo.com/ group/Microfinan cePractice/ message/15055; _ylc=X3oDMTJyajJ ob2J2BF9TAzk3MzU 5NzE1BGdycElkAzM yNDAyNjQEZ3Jwc3B JZAMxNzA1MDAxMjQ yBG1zZ0lkAzE1MDU 1BHNlYwNkbXNnBHN sawN2bXNnBHN0aW1 lAzEzOTI3MzAzNTk ->
> Tue Feb 18, 2014 4:05 am (PST) . Posted by: "Anuj Jain" jainanuj <ajain@stfx.ca?subject=Re% 3A%20The% 20Equal%20Credit %20Opportunity% 20Act%20% 2F%20USA>
> From my living in US during 2001-2005, I had some exposure to this
> debate, but must admit that I have not kept up on the subject since, except
> for the crisis in 2008 that was largely blamed on poor housing lending
> practices. Your brief analysis shows the double edginess of credit as a
> right. For Banks, damn if you do and damn if you don't. And yet, millions
> are excluded from capital access because of risk perception or prejudice,
> or both.
>
> May be the experience of US with 'equal opportunity&# 39; act (and other
> places where such acts may exist) would be worth studying further; as we
> encourage policies shift in other countries. Would AFI be a good custodian
> to look into this?
>
> Please do share if you can, anything else that may be available from US
> experience.
>
> Regards,
>
> Anuj
>
> p.s. in my brief read of recent reports that showed up on google search;
> those reports suggest two important points. a. proportion of current risk
> on high-end real-estate defaults is very substantial in US market (63%!),
> and b. most of the defaults on housing loans have shifted from sub-prime to
> prime borrowers (which means, those with high credit rating are higher
> percentage of defaulters) after 2009 due to rising unemployment. I would
> search for papers that show, what percentage of defaults came from
> lower-end housing market in 2006-2008; to know the 'poverty- default&# 39;
> correlation. This reading is certainly interesting because otherwise, the
> image that pops-up around sub-prime crisis is those poor black communities
> or migrant Latino population ; which unfortunately perhaps shows my own
> prejudice. The reality perhaps was very different and more complex.
>
> http://www.realtytr ac.com/content/ news-and- opinion/high- end-foreclosures
> -increasing- in-2013-bucking- national- trend-7945
>
> http://economistsvi ew.typepad. com/economistsvi ew/2012/03/ the-changing-
> face-of-foreclosure s.html
>
> http://t.www. na-businesspress .com/JAF/ GeanF_Web13_ 6_.pdf
>
> From: MicrofinancePractic e@yahoogroups. com [mailto:Microfinanc ePractic
> e@yahoogroups. com] On Behalf Of Meyer, Richard
> Sent: Monday, February 17, 2014 10:22 PM
> To: MicrofinancePractic e@yahoogroups. com
> Subject: [MFP] RE: The Equal Credit Opportunity Act / USA
>
> You probably know that there has been a large debate over the years in the
> US about redlining, the practice of outlining geographic areas of housing
> (may be poor, deteriorated, occupied by minorities) and make fewer or no
> loans within those areas. There have been many attempts to measure the
> phenomena, and reduce the problem through various means when it is found. I
> do not know about the current state of the research regarding the issue. It
> is argued that government policies to stimulate home ownership, including
> relaxed credit underwriting, is one of the causes behind the financial
> collapse a few years ago. There are allegations that minorities were
> charged higher rates and given tougher terms for loans made during this
> period. Dick
>
> From: MicrofinancePractic e@yahoogroups. com<mailto:Microfin ancePractic
> e@yahoogroups. com> [mailto:MicrofinancePractic e@yahoogroups. com] On
> Behalf Of Anuj Jain
> Sent: Monday, February 17, 2014 10:59 AM
> To: MicrofinancePractic e@yahoogroups. com<mailto:Microfin ancePractic
> e@yahoogroups. com>
> Subject: [MFP] The Equal Credit Opportunity Act / USA
>
> We in the sector have often talked and debated about 'right to capital or
> a loan', and if that is indeed a right, or is rather a privilege that one
> must earn by building one's credit worthiness. Some years ago, Prof. Yunus
> had created quite a debate by saying that it can be considered as a
> fundamental right.
>
> Regardless of that debate, here is this example, from USA, of this Equal
> Credit Opportunity Act; which does not give a right to borrow, but at the
> same time, stops the lending institutions from discriminating against any
> group of people or individual for accessing credit.
>
> Federal Fair Lending Regulations and Statutes
> Equal Credit Opportunity
>
> The Equal Credit Opportunity Act (ECOA) of 1974, which is implemented by
> the Board's Regulation B, applies to all creditors. The statute requires
> financial institutions and other firms engaged in the extension of credit
> to ''make credit equally available to all creditworthy customers without
> regard to sex or marital status.' ' Moreover, the statute makes it
> unlawful for ''any creditor to discriminate against any applicant with
> respect to any aspect of a credit transaction (1) on the basis of race,
> color, religion, national origin, sex or marital status, or age (provided
> the applicant has the capacity to contract); (2) because all or part of the
> applicant' s income derives from any public assistance program; or (3)
> because the applicant has in good faith exercised any right under the
> Consumer Credit Protection Act.''
>
> Read on for more details...
> http://www.federalr eserve.gov/ boarddocs/ supmanual/ cch/fair_ lend_reg_ b.pdf
>
> I wonder if such / similar laws exist in other countries; and what have
> been practical implications of this Act in USA? Will look forward to hear
> back.
>
> Best,
> anuj
>
> Anuj K. Jain
> Sr. Coady Fellow| Microfinance and Development| COADY International
> Institute
> St. Francis Xavier University, Antigonish, Nova Scotia, B2G 2W5| Ph:
> 902-872-0521
> [cid:image001.jpg@ 01CF2C73. F6E41E40]
>
> Reply to sender <ajain@stfx.ca?subject=Re% 3A%20The% 20Equal%20Credit %20Opportunity% 20Act%20% 2F%20USA> . Reply to group <MicrofinancePractic e@yahoogroups. com?subject=Re% 3A%20The% 20Equal%20Credit %20Opportunity% 20Act%20% 2F%20USA> . Reply via Web Post <http://groups. yahoo.com/ group/Microfinan cePractice/ post;_ylc= X3oDMTJyZWw5aWNs BF9TAzk3MzU5NzE1 BGdycElkAzMyNDAy NjQEZ3Jwc3BJZAMx NzA1MDAxMjQyBG1z Z0lkAzE1MDU1BHNl YwNkbXNnBHNsawNy cGx5BHN0aW1lAzEz OTI3MzAzNTk- ?act=reply&messa geNum=15055> . All Messages (3) <http://groups. yahoo.com/ group/Microfinan cePractice/ message/15053; _ylc=X3oDMTM3OTR oMmFmBF9TAzk3MzU 5NzE1BGdycElkAzM yNDAyNjQEZ3Jwc3B JZAMxNzA1MDAxMjQ yBG1zZ0lkAzE1MDU 1BHNlYwNkbXNnBHN sawN2dHBjBHN0aW1 lAzEzOTI3MzAzNTk EdHBjSWQDMTUwNTM -> . Top
> ^ <#1444532d5498b8 30_toc>
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Tue Feb 18, 2014 7:48 am (PST) . Posted by:
"Ratnesh" ratnesh_00
Dear
Anuj,
You
have raised a very pertinent issue regarding barriers that certain communities
face related to access to finance. I would like to share the Indian experience
on removing / reducing these barriers through concerted action at the highest
levels of government.
As
many of the members may recall that India had constituted a High Level
Committee under the Chairmanship of Justice (Retired) Rajinder Sachar to gather
data/ information for preparation of a comprehensive report on the social,
economic and educational status of the Muslim community of India had made
specific recommendations to remove these barriers. I would like to draw the
attention of the members to a recent update on the status of compliance to
these recommendations by the concerned ministries (http://www.minority affairs.gov. in/sites/ upload_files/ moma/files/ Sachar_Committee -Status_of_ Follow-up_ action_on_ decisions. pdf).
The section on credit is relevant for the discussion as there is a gradual
positive trend in improved access to credit by minorities.
The
Union finance minister during his interim budget presentation made on 18
February 2014 madetwo announcements regarding financial access to excluded
communities:
"Ten years ago, the minorities had 14,15,000
bank accounts in 121 districts of India where there is a concentration of
minorities. At the end of March, 2013, they had 43,52,000 accounts and the
volume of lending had soared from INR 4,000 crore to INR 66,500 crore. Loans to
minority communities in the whole country stood at INR 211,451 crore at the end
of December 2013."
He
has also proposed to provide an initial capital of INR 200 crore to set
up a Venture Capital Fund for Scheduled Castes in order to promote
entrepreneurship among the scheduled castes and to provide concessional finance
to them.
It
would be interesting to further examine the impact of these positive
developments on the financial access questions that are being raised in various
fora.
Best
regards
Ratnesh
Microfinance Practice Group
3 Messages
Digest #3717
1a
The Equal Credit Opportunity Act / USA by "Anuj Jain" jainanuj
1b
Re: The Equal Credit Opportunity Act / USA by "Meyer, Richard"
1c
Re: The Equal Credit Opportunity Act / USA by "Anuj Jain" jainanuj
Messages
1a
The Equal Credit Opportunity Act / USA
Mon Feb 17, 2014 8:20 am (PST) . Posted by:
"Anuj Jain" jainanuj
We in the sector have often talked and debated about 'right to capital or a loan', and if that is indeed a right, or is rather a privilege that one must earn by building one's credit worthiness. Some years ago, Prof. Yunus had created quite a debate by saying that it can be considered as a fundamental right.
Regardless of that debate, here is this example, from USA, of this Equal Credit Opportunity Act; which does not give a right to borrow, but at the same time, stops the lending institutions from discriminating against any group of people or individual for accessing credit.
Federal Fair Lending Regulations and Statutes
Equal Credit Opportunity
The Equal Credit Opportunity Act (ECOA) of 1974, which is implemented by the Board's Regulation B, applies to all creditors. The statute requires financial institutions and other firms engaged in the extension of credit to ''make credit equally available to all creditworthy customers without regard to sex or marital status.' ' Moreover, the statute makes it unlawful for ''any creditor to discriminate against any applicant with respect to any aspect of a credit transaction (1) on the basis of race, color, religion, national origin, sex or marital status, or age (provided the applicant has the capacity to contract); (2) because all or part of the applicant' s income derives from any public assistance program; or (3) because the applicant has in good faith exercised any right under the Consumer Credit Protection Act.''
Read on for more details...
http://www.federalr eserve.gov/ boarddocs/ supmanual/ cch/fair_ lend_reg_ b.pdf
I wonder if such / similar laws exist in other countries; and what have been practical implications of this Act in USA? Will look forward to hear back.
Best,
anuj
Anuj K. Jain
Sr. Coady Fellow| Microfinance and Development| COADY International Institute
St. Francis Xavier University, Antigonish, Nova Scotia, B2G 2W5| Ph: 902-872-0521
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1b
Re: The Equal Credit Opportunity Act / USA
Mon Feb 17, 2014 6:22 pm (PST) . Posted by:
"Meyer, Richard"
You probably know that there has been a large debate over the years in the US about redlining, the practice of outlining geographic areas of housing (may be poor, deteriorated, occupied by minorities) and make fewer or no loans within those areas. There have been many attempts to measure the phenomena, and reduce the problem through various means when it is found. I do not know about the current state of the research regarding the issue. It is argued that government policies to stimulate home ownership, including relaxed credit underwriting, is one of the causes behind the financial collapse a few years ago. There are allegations that minorities were charged higher rates and given tougher terms for loans made during this period. Dick
From: MicrofinancePractic e@yahoogroups. com [mailto:Microfinanc ePractic e@yahoogroups. com] On Behalf Of Anuj Jain
Sent: Monday, February 17, 2014 10:59 AM
To: MicrofinancePractic e@yahoogroups. com
Subject: [MFP] The Equal Credit Opportunity Act / USA
We in the sector have often talked and debated about 'right to capital or a loan', and if that is indeed a right, or is rather a privilege that one must earn by building one's credit worthiness. Some years ago, Prof. Yunus had created quite a debate by saying that it can be considered as a fundamental right.
Regardless of that debate, here is this example, from USA, of this Equal Credit Opportunity Act; which does not give a right to borrow, but at the same time, stops the lending institutions from discriminating against any group of people or individual for accessing credit.
Federal Fair Lending Regulations and Statutes
Equal Credit Opportunity
The Equal Credit Opportunity Act (ECOA) of 1974, which is implemented by the Board's Regulation B, applies to all creditors. The statute requires financial institutions and other firms engaged in the extension of credit to ''make credit equally available to all creditworthy customers without regard to sex or marital status.' ' Moreover, the statute makes it unlawful for ''any creditor to discriminate against any applicant with respect to any aspect of a credit transaction (1) on the basis of race, color, religion, national origin, sex or marital status, or age (provided the applicant has the capacity to contract); (2) because all or part of the applicant' s income derives from any public assistance program; or (3) because the applicant has in good faith exercised any right under the Consumer Credit Protection Act.''
Read on for more details...
http://www.federalr eserve.gov/ boarddocs/ supmanual/ cch/fair_ lend_reg_ b.pdf
I wonder if such / similar laws exist in other countries; and what have been practical implications of this Act in USA? Will look forward to hear back.
Best,
anuj
Anuj K. Jain
Sr. Coady Fellow| Microfinance and Development| COADY International Institute
St. Francis Xavier University, Antigonish, Nova Scotia, B2G 2W5| Ph: 902-872-0521
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1c
Re: The Equal Credit Opportunity Act / USA
Tue Feb 18, 2014 4:05 am (PST) . Posted by:
"Anuj Jain" jainanuj
From my living in US during 2001-2005, I had some exposure to this debate, but must admit that I have not kept up on the subject since, except for the crisis in 2008 that was largely blamed on poor housing lending practices. Your brief analysis shows the double edginess of credit as a right. For Banks, damn if you do and damn if you don't. And yet, millions are excluded from capital access because of risk perception or prejudice, or both.
May be the experience of US with 'equal opportunity&# 39; act (and other places where such acts may exist) would be worth studying further; as we encourage policies shift in other countries. Would AFI be a good custodian to look into this?
Please do share if you can, anything else that may be available from US experience.
Regards,
Anuj
p.s. in my brief read of recent reports that showed up on google search; those reports suggest two important points. a. proportion of current risk on high-end real-estate defaults is very substantial in US market (63%!), and b. most of the defaults on housing loans have shifted from sub-prime to prime borrowers (which means, those with high credit rating are higher percentage of defaulters) after 2009 due to rising unemployment. I would search for papers that show, what percentage of defaults came from lower-end housing market in 2006-2008; to know the 'poverty- default&# 39; correlation. This reading is certainly interesting because otherwise, the image that pops-up around sub-prime crisis is those poor black communities or migrant Latino population ; which unfortunately perhaps shows my own prejudice. The reality perhaps was very different and more complex.
http://www.realtytr ac.com/content/ news-and- opinion/high- end-foreclosures -increasing- in-2013-bucking- national- trend-7945
http://economistsvi ew.typepad. com/economistsvi ew/2012/03/ the-changing- face-of-foreclos ures.html
http://t.www. na-businesspress .com/JAF/ GeanF_Web13_ 6_.pdf
From: MicrofinancePractic e@yahoogroups. com [mailto:Microfinanc ePractic e@yahoogroups. com] On Behalf Of Meyer, Richard
Sent: Monday, February 17, 2014 10:22 PM
To: MicrofinancePractic e@yahoogroups. com
Subject: [MFP] RE: The Equal Credit Opportunity Act / USA
You probably know that there has been a large debate over the years in the US about redlining, the practice of outlining geographic areas of housing (may be poor, deteriorated, occupied by minorities) and make fewer or no loans within those areas. There have been many attempts to measure the phenomena, and reduce the problem through various means when it is found. I do not know about the current state of the research regarding the issue. It is argued that government policies to stimulate home ownership, including relaxed credit underwriting, is one of the causes behind the financial collapse a few years ago. There are allegations that minorities were charged higher rates and given tougher terms for loans made during this period. Dick
From: MicrofinancePractic e@yahoogroups. com<mailto: MicrofinancePrac tic e@yahoogroups. com> [mailto:Microfinanc ePractic e@yahoogroups. com] On Behalf Of Anuj Jain
Sent: Monday, February 17, 2014 10:59 AM
To: MicrofinancePractic e@yahoogroups. com<mailto: MicrofinancePrac tic e@yahoogroups. com>
Subject: [MFP] The Equal Credit Opportunity Act / USA
We in the sector have often talked and debated about 'right to capital or a loan', and if that is indeed a right, or is rather a privilege that one must earn by building one's credit worthiness. Some years ago, Prof. Yunus had created quite a debate by saying that it can be considered as a fundamental right.
Regardless of that debate, here is this example, from USA, of this Equal Credit Opportunity Act; which does not give a right to borrow, but at the same time, stops the lending institutions from discriminating against any group of people or individual for accessing credit.
Federal Fair Lending Regulations and Statutes
Equal Credit Opportunity
The Equal Credit Opportunity Act (ECOA) of 1974, which is implemented by the Board's Regulation B, applies to all creditors. The statute requires financial institutions and other firms engaged in the extension of credit to ''make credit equally available to all creditworthy customers without regard to sex or marital status.' ' Moreover, the statute makes it unlawful for ''any creditor to discriminate against any applicant with respect to any aspect of a credit transaction (1) on the basis of race, color, religion, national origin, sex or marital status, or age (provided the applicant has the capacity to contract); (2) because all or part of the applicant' s income derives from any public assistance program; or (3) because the applicant has in good faith exercised any right under the Consumer Credit Protection Act.''
Read on for more details...
http://www.federalr eserve.gov/ boarddocs/ supmanual/ cch/fair_ lend_reg_ b.pdf
I wonder if such / similar laws exist in other countries; and what have been practical implications of this Act in USA? Will look forward to hear back.
Best,
anuj
Anuj K. Jain
Sr. Coady Fellow| Microfinance and Development| COADY International Institute
St. Francis Xavier University, Antigonish, Nova Scotia, B2G 2W5| Ph: 902-872-0521
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Anuj,
You
have raised a very pertinent issue regarding barriers that certain communities
face related to access to finance. I would like to share the Indian experience
on removing / reducing these barriers through concerted action at the highest
levels of government.
As
many of the members may recall that India had constituted a High Level
Committee under the Chairmanship of Justice (Retired) Rajinder Sachar to gather
data/ information for preparation of a comprehensive report on the social,
economic and educational status of the Muslim community of India had made
specific recommendations to remove these barriers. I would like to draw the
attention of the members to a recent update on the status of compliance to
these recommendations by the concerned ministries (http://www.minority affairs.gov. in/sites/ upload_files/ moma/files/ Sachar_Committee -Status_of_ Follow-up_ action_on_ decisions. pdf).
The section on credit is relevant for the discussion as there is a gradual
positive trend in improved access to credit by minorities.
The
Union finance minister during his interim budget presentation made on 18
February 2014 madetwo announcements regarding financial access to excluded
communities:
"Ten years ago, the minorities had 14,15,000
bank accounts in 121 districts of India where there is a concentration of
minorities. At the end of March, 2013, they had 43,52,000 accounts and the
volume of lending had soared from INR 4,000 crore to INR 66,500 crore. Loans to
minority communities in the whole country stood at INR 211,451 crore at the end
of December 2013."
He
has also proposed to provide an initial capital of INR 200 crore to set
up a Venture Capital Fund for Scheduled Castes in order to promote
entrepreneurship among the scheduled castes and to provide concessional finance
to them.
It
would be interesting to further examine the impact of these positive
developments on the financial access questions that are being raised in various
fora.
Best
regards
Ratnesh
Microfinance Practice Group
3 Messages
Digest #3717
1a
The Equal Credit Opportunity Act / USA by "Anuj Jain" jainanuj
1b
Re: The Equal Credit Opportunity Act / USA by "Meyer, Richard"
1c
Re: The Equal Credit Opportunity Act / USA by "Anuj Jain" jainanuj
Messages
1a
The Equal Credit Opportunity Act / USA
Mon Feb 17, 2014 8:20 am (PST) . Posted by:
"Anuj Jain" jainanuj
We in the sector have often talked and debated about 'right to capital or a loan', and if that is indeed a right, or is rather a privilege that one must earn by building one's credit worthiness. Some years ago, Prof. Yunus had created quite a debate by saying that it can be considered as a fundamental right.
Regardless of that debate, here is this example, from USA, of this Equal Credit Opportunity Act; which does not give a right to borrow, but at the same time, stops the lending institutions from discriminating against any group of people or individual for accessing credit.
Federal Fair Lending Regulations and Statutes
Equal Credit Opportunity
The Equal Credit Opportunity Act (ECOA) of 1974, which is implemented by the Board's Regulation B, applies to all creditors. The statute requires financial institutions and other firms engaged in the extension of credit to ''make credit equally available to all creditworthy customers without regard to sex or marital status.' ' Moreover, the statute makes it unlawful for ''any creditor to discriminate against any applicant with respect to any aspect of a credit transaction (1) on the basis of race, color, religion, national origin, sex or marital status, or age (provided the applicant has the capacity to contract); (2) because all or part of the applicant' s income derives from any public assistance program; or (3) because the applicant has in good faith exercised any right under the Consumer Credit Protection Act.''
Read on for more details...
http://www.federalr eserve.gov/ boarddocs/ supmanual/ cch/fair_ lend_reg_ b.pdf
I wonder if such / similar laws exist in other countries; and what have been practical implications of this Act in USA? Will look forward to hear back.
Best,
anuj
Anuj K. Jain
Sr. Coady Fellow| Microfinance and Development| COADY International Institute
St. Francis Xavier University, Antigonish, Nova Scotia, B2G 2W5| Ph: 902-872-0521
[cid:image001. jpg@ 01CF2BD5. 3B5DDFB0]
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1b
Re: The Equal Credit Opportunity Act / USA
Mon Feb 17, 2014 6:22 pm (PST) . Posted by:
"Meyer, Richard"
You probably know that there has been a large debate over the years in the US about redlining, the practice of outlining geographic areas of housing (may be poor, deteriorated, occupied by minorities) and make fewer or no loans within those areas. There have been many attempts to measure the phenomena, and reduce the problem through various means when it is found. I do not know about the current state of the research regarding the issue. It is argued that government policies to stimulate home ownership, including relaxed credit underwriting, is one of the causes behind the financial collapse a few years ago. There are allegations that minorities were charged higher rates and given tougher terms for loans made during this period. Dick
From: MicrofinancePractic e@yahoogroups. com [mailto:Microfinanc ePractic e@yahoogroups. com] On Behalf Of Anuj Jain
Sent: Monday, February 17, 2014 10:59 AM
To: MicrofinancePractic e@yahoogroups. com
Subject: [MFP] The Equal Credit Opportunity Act / USA
We in the sector have often talked and debated about 'right to capital or a loan', and if that is indeed a right, or is rather a privilege that one must earn by building one's credit worthiness. Some years ago, Prof. Yunus had created quite a debate by saying that it can be considered as a fundamental right.
Regardless of that debate, here is this example, from USA, of this Equal Credit Opportunity Act; which does not give a right to borrow, but at the same time, stops the lending institutions from discriminating against any group of people or individual for accessing credit.
Federal Fair Lending Regulations and Statutes
Equal Credit Opportunity
The Equal Credit Opportunity Act (ECOA) of 1974, which is implemented by the Board's Regulation B, applies to all creditors. The statute requires financial institutions and other firms engaged in the extension of credit to ''make credit equally available to all creditworthy customers without regard to sex or marital status.' ' Moreover, the statute makes it unlawful for ''any creditor to discriminate against any applicant with respect to any aspect of a credit transaction (1) on the basis of race, color, religion, national origin, sex or marital status, or age (provided the applicant has the capacity to contract); (2) because all or part of the applicant' s income derives from any public assistance program; or (3) because the applicant has in good faith exercised any right under the Consumer Credit Protection Act.''
Read on for more details...
http://www.federalr eserve.gov/ boarddocs/ supmanual/ cch/fair_ lend_reg_ b.pdf
I wonder if such / similar laws exist in other countries; and what have been practical implications of this Act in USA? Will look forward to hear back.
Best,
anuj
Anuj K. Jain
Sr. Coady Fellow| Microfinance and Development| COADY International Institute
St. Francis Xavier University, Antigonish, Nova Scotia, B2G 2W5| Ph: 902-872-0521
[cid:image001. jpg@ 01CADFB8. 12862C40]
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1c
Re: The Equal Credit Opportunity Act / USA
Tue Feb 18, 2014 4:05 am (PST) . Posted by:
"Anuj Jain" jainanuj
From my living in US during 2001-2005, I had some exposure to this debate, but must admit that I have not kept up on the subject since, except for the crisis in 2008 that was largely blamed on poor housing lending practices. Your brief analysis shows the double edginess of credit as a right. For Banks, damn if you do and damn if you don't. And yet, millions are excluded from capital access because of risk perception or prejudice, or both.
May be the experience of US with 'equal opportunity&# 39; act (and other places where such acts may exist) would be worth studying further; as we encourage policies shift in other countries. Would AFI be a good custodian to look into this?
Please do share if you can, anything else that may be available from US experience.
Regards,
Anuj
p.s. in my brief read of recent reports that showed up on google search; those reports suggest two important points. a. proportion of current risk on high-end real-estate defaults is very substantial in US market (63%!), and b. most of the defaults on housing loans have shifted from sub-prime to prime borrowers (which means, those with high credit rating are higher percentage of defaulters) after 2009 due to rising unemployment. I would search for papers that show, what percentage of defaults came from lower-end housing market in 2006-2008; to know the 'poverty- default&# 39; correlation. This reading is certainly interesting because otherwise, the image that pops-up around sub-prime crisis is those poor black communities or migrant Latino population ; which unfortunately perhaps shows my own prejudice. The reality perhaps was very different and more complex.
http://www.realtytr ac.com/content/ news-and- opinion/high- end-foreclosures -increasing- in-2013-bucking- national- trend-7945
http://economistsvi ew.typepad. com/economistsvi ew/2012/03/ the-changing- face-of-foreclos ures.html
http://t.www. na-businesspress .com/JAF/ GeanF_Web13_ 6_.pdf
From: MicrofinancePractic e@yahoogroups. com [mailto:Microfinanc ePractic e@yahoogroups. com] On Behalf Of Meyer, Richard
Sent: Monday, February 17, 2014 10:22 PM
To: MicrofinancePractic e@yahoogroups. com
Subject: [MFP] RE: The Equal Credit Opportunity Act / USA
You probably know that there has been a large debate over the years in the US about redlining, the practice of outlining geographic areas of housing (may be poor, deteriorated, occupied by minorities) and make fewer or no loans within those areas. There have been many attempts to measure the phenomena, and reduce the problem through various means when it is found. I do not know about the current state of the research regarding the issue. It is argued that government policies to stimulate home ownership, including relaxed credit underwriting, is one of the causes behind the financial collapse a few years ago. There are allegations that minorities were charged higher rates and given tougher terms for loans made during this period. Dick
From: MicrofinancePractic e@yahoogroups. com<mailto: MicrofinancePrac tic e@yahoogroups. com> [mailto:Microfinanc ePractic e@yahoogroups. com] On Behalf Of Anuj Jain
Sent: Monday, February 17, 2014 10:59 AM
To: MicrofinancePractic e@yahoogroups. com<mailto: MicrofinancePrac tic e@yahoogroups. com>
Subject: [MFP] The Equal Credit Opportunity Act / USA
We in the sector have often talked and debated about 'right to capital or a loan', and if that is indeed a right, or is rather a privilege that one must earn by building one's credit worthiness. Some years ago, Prof. Yunus had created quite a debate by saying that it can be considered as a fundamental right.
Regardless of that debate, here is this example, from USA, of this Equal Credit Opportunity Act; which does not give a right to borrow, but at the same time, stops the lending institutions from discriminating against any group of people or individual for accessing credit.
Federal Fair Lending Regulations and Statutes
Equal Credit Opportunity
The Equal Credit Opportunity Act (ECOA) of 1974, which is implemented by the Board's Regulation B, applies to all creditors. The statute requires financial institutions and other firms engaged in the extension of credit to ''make credit equally available to all creditworthy customers without regard to sex or marital status.' ' Moreover, the statute makes it unlawful for ''any creditor to discriminate against any applicant with respect to any aspect of a credit transaction (1) on the basis of race, color, religion, national origin, sex or marital status, or age (provided the applicant has the capacity to contract); (2) because all or part of the applicant' s income derives from any public assistance program; or (3) because the applicant has in good faith exercised any right under the Consumer Credit Protection Act.''
Read on for more details...
http://www.federalr eserve.gov/ boarddocs/ supmanual/ cch/fair_ lend_reg_ b.pdf
I wonder if such / similar laws exist in other countries; and what have been practical implications of this Act in USA? Will look forward to hear back.
Best,
anuj
Anuj K. Jain
Sr. Coady Fellow| Microfinance and Development| COADY International Institute
St. Francis Xavier University, Antigonish, Nova Scotia, B2G 2W5| Ph: 902-872-0521
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Tue Feb 18, 2014 9:31 am (PST) . Posted by:
"Anuj Jain" jainanuj
Thanks Ratnesh! For our non-Indian friends, I am taking the liberty of inserting the figures in US$s (roughly $ 1 = 60 Indian Rupees).
Great to see such an affirmative policy creating impact in real numbers. Btw, would you have access to any study on India's priority sector lending policies on poverty lending?
Here is another view of how overall formal credit delivery is regionally skewed in Indian banking system.
[cid:image001.png@ 01CF2CA8. 796EB4E0]
Source: http://capitalmind. in/2013/04/ 30-of-all- bank-deposits- are-in-mumbai- and-delhi/
It provides some very useful insights.
the question remains: does an Act like Equal Credit Opportunity (of US) help reduce discrimination for poor/ marginalized at the systemic level? On the other hand, is the banking system justified in their credit policies to remain more cautious against higher risk communities / citizens? In a privatized banking system, where credit policy is legitimately a factor of depositors' safety and shareholders' return; what legitimate means and grounds do we have to argue against? ECOA seems to provide a middle-ground, ensuring transparency in information (if nothing else). But maybe not as effective in fighting discrimination as one would like?
Thanks and best regards,
Anuj
From: MicrofinancePractic e@yahoogroups. com [mailto:MicrofinancePractic e@yahoogroups. com] On Behalf Of Ratnesh
Sent: Tuesday, February 18, 2014 11:37 AM
To: microfinancepractic e@yahoogroups. com
Subject: Re: [MFP] Digest Number 3717
Dear Anuj,
You have raised a very pertinent issue regarding barriers that certain communities face related to access to finance. I would like to share the Indian experience on removing / reducing these barriers through concerted action at the highest levels of government.
As many of the members may recall that India had constituted a High Level Committee under the Chairmanship of Justice (Retired) Rajinder Sachar to gather data/ information for preparation of a comprehensive report on the social, economic and educational status of the Muslim community of India had made specific recommendations to remove these barriers. I would like to draw the attention of the members to a recent update on the status of compliance to these recommendations by the concerned ministries (http://www.minority affairs.gov. in/sites/ upload_files/ moma/files/ Sachar_Committee -Status_of_ Follow-up_ action_on_ decisions. pdf). The section on credit is relevant for the discussion as there is a gradual positive trend in improved access to credit by minorities.
The Union finance minister during his interim budget presentation made on 18 February 2014 madetwo announcements regarding financial access to excluded communities:
"Ten years ago, the minorities had 14,15,000 bank accounts in 121 districts of India where there is a concentration of minorities. At the end of March, 2013, they had 43,52,000 accounts and the volume of lending had soared from INR 4,000 crore ($ 665 million) to INR 66,500 crore ($11 Billion). Loans to minority communities in the whole country stood at INR 211,451 crore ($ 35 billion) at the end of December 2013."
He has also proposed to provide an initial capital of INR 200 crore ($33 million) to set up a Venture Capital Fund for Scheduled Castes in order to promote entrepreneurship among the scheduled castes and to provide concessional finance to them.
It would be interesting to further examine the impact of these positive developments on the financial access questions that are being raised in various fora.
Best regards
Ratnesh
[http://l.yimg. com/ru/static/ images/yg/ img/email/ new_logo/ logo-groups- transparent- 180x40.png]<http://groups. yahoo.com/ ;_ylc=X3oDMTJkY2 pmOWZvBF9TAzk3Mz U5NzE1BGdycElkAz MyNDAyNjQEZ3Jwc3 BJZAMxNzA1MDAxMj QyBHNlYwNmdHIEc2 xrA2dmcARzdGltZQ MxMzkyNzMwMzU5>
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3 Messages
Digest #3717
1a
The Equal Credit Opportunity Act / USA <https://us-mg6. mail.yahoo. com/neo/launch? retry_ssl= 1#1a> by "Anuj Jain" jainanuj
1b
Re: The Equal Credit Opportunity Act / USA <https://us-mg6. mail.yahoo. com/neo/launch? retry_ssl= 1#1b> by "Meyer, Richard"
1c
Re: The Equal Credit Opportunity Act / USA <https://us-mg6. mail.yahoo. com/neo/launch? retry_ssl= 1#1c> by "Anuj Jain" jainanuj
Messages
1a
The Equal Credit Opportunity Act / USA <http://groups. yahoo.com/ group/Microfinan cePractice/ message/15053; _ylc=X3oDMTJyYmk 4ZWxqBF9TAzk3MzU 5NzE1BGdycElkAzM yNDAyNjQEZ3Jwc3B JZAMxNzA1MDAxMjQ yBG1zZ0lkAzE1MDU zBHNlYwNkbXNnBHN sawN2bXNnBHN0aW1 lAzEzOTI3MzAzNTk ->
Mon Feb 17, 2014 8:20 am (PST) . Posted by:
"Anuj Jain" jainanuj <mailto:ajain@stfx.ca?subject=Re% 3A%20The% 20Equal%20Credit %20Opportunity% 20Act%20% 2F%20USA>
We in the sector have often talked and debated about 'right to capital or a loan', and if that is indeed a right, or is rather a privilege that one must earn by building one's credit worthiness. Some years ago, Prof. Yunus had created quite a debate by saying that it can be considered as a fundamental right.
Regardless of that debate, here is this example, from USA, of this Equal Credit Opportunity Act; which does not give a right to borrow, but at the same time, stops the lending institutions from discriminating against any group of people or individual for accessing credit.
Federal Fair Lending Regulations and Statutes
Equal Credit Opportunity
The Equal Credit Opportunity Act (ECOA) of 1974, which is implemented by the Board's Regulation B, applies to all creditors. The statute requires financial institutions and other firms engaged in the extension of credit to ''make credit equally available to all creditworthy customers without regard to sex or marital status.' ' Moreover, the statute makes it unlawful for ''any creditor to discriminate against any applicant with respect to any aspect of a credit transaction (1) on the basis of race, color, religion, national origin, sex or marital status, or age (provided the applicant has the capacity to contract); (2) because all or part of the applicant' s income derives from any public assistance program; or (3) because the applicant has in good faith exercised any right under the Consumer Credit Protection Act.''
Read on for more details...
http://www.federalr eserve.gov/ boarddocs/ supmanual/ cch/fair_ lend_reg_ b.pdf
I wonder if such / similar laws exist in other countries; and what have been practical implications of this Act in USA? Will look forward to hear back.
Best,
anuj
Anuj K. Jain
Sr. Coady Fellow| Microfinance and Development| COADY International Institute
St. Francis Xavier University, Antigonish, Nova Scotia, B2G 2W5| Ph: 902-872-0521
[cid:image001. jpg@ 01CF2BD5. 3B5DDFB0]
Reply to sender <mailto:ajain@stfx.ca?subject=Re% 3A%20The% 20Equal%20Credit %20Opportunity% 20Act%20% 2F%20USA> . Reply to group <mailto:MicrofinancePractic e@yahoogroups. com?subject=Re% 3A%20The% 20Equal%20Credit %20Opportunity% 20Act%20% 2F%20USA> . Reply via Web Post <http://groups. yahoo.com/ group/Microfinan cePractice/ post;_ylc= X3oDMTJyZTM0bG5x BF9TAzk3MzU5NzE1 BGdycElkAzMyNDAy NjQEZ3Jwc3BJZAMx NzA1MDAxMjQyBG1z Z0lkAzE1MDUzBHNl YwNkbXNnBHNsawNy cGx5BHN0aW1lAzEz OTI3MzAzNTk- ?act=reply&messa geNum=15053> . All Messages (3) <http://groups. yahoo.com/ group/Microfinan cePractice/ message/15053; _ylc=X3oDMTM3cmV ub2xvBF9TAzk3MzU 5NzE1BGdycElkAzM yNDAyNjQEZ3Jwc3B JZAMxNzA1MDAxMjQ yBG1zZ0lkAzE1MDU zBHNlYwNkbXNnBHN sawN2dHBjBHN0aW1 lAzEzOTI3MzAzNTk EdHBjSWQDMTUwNTM -> . Top ^ <https://us-mg6. mail.yahoo. com/neo/launch? retry_ssl= 1#toc>
1b
Re: The Equal Credit Opportunity Act / USA <http://groups. yahoo.com/ group/Microfinan cePractice/ message/15054; _ylc=X3oDMTJydWl udmNiBF9TAzk3MzU 5NzE1BGdycElkAzM yNDAyNjQEZ3Jwc3B JZAMxNzA1MDAxMjQ yBG1zZ0lkAzE1MDU 0BHNlYwNkbXNnBHN sawN2bXNnBHN0aW1 lAzEzOTI3MzAzNTk ->
Mon Feb 17, 2014 6:22 pm (PST) . Posted by:
"Meyer, Richard" <mailto:meyer.19@osu. edu?subject=Re% 3A%20The% 20Equal%20Credit %20Opportunity% 20Act%20% 2F%20USA>
You probably know that there has been a large debate over the years in the US about redlining, the practice of outlining geographic areas of housing (may be poor, deteriorated, occupied by minorities) and make fewer or no loans within those areas. There have been many attempts to measure the phenomena, and reduce the problem through various means when it is found. I do not know about the current state of the research regarding the issue. It is argued that government policies to stimulate home ownership, including relaxed credit underwriting, is one of the causes behind the financial collapse a few years ago. There are allegations that minorities were charged higher rates and given tougher terms for loans made during this period. Dick
From: MicrofinancePractic e@yahoogroups. com [mailto:Microfinanc ePractic e@yahoogroups. com] On Behalf Of Anuj Jain
Sent: Monday, February 17, 2014 10:59 AM
To: MicrofinancePractic e@yahoogroups. com
Subject: [MFP] The Equal Credit Opportunity Act / USA
We in the sector have often talked and debated about 'right to capital or a loan', and if that is indeed a right, or is rather a privilege that one must earn by building one's credit worthiness. Some years ago, Prof. Yunus had created quite a debate by saying that it can be considered as a fundamental right.
Regardless of that debate, here is this example, from USA, of this Equal Credit Opportunity Act; which does not give a right to borrow, but at the same time, stops the lending institutions from discriminating against any group of people or individual for accessing credit.
Federal Fair Lending Regulations and Statutes
Equal Credit Opportunity
The Equal Credit Opportunity Act (ECOA) of 1974, which is implemented by the Board's Regulation B, applies to all creditors. The statute requires financial institutions and other firms engaged in the extension of credit to ''make credit equally available to all creditworthy customers without regard to sex or marital status.' ' Moreover, the statute makes it unlawful for ''any creditor to discriminate against any applicant with respect to any aspect of a credit transaction (1) on the basis of race, color, religion, national origin, sex or marital status, or age (provided the applicant has the capacity to contract); (2) because all or part of the applicant' s income derives from any public assistance program; or (3) because the applicant has in good faith exercised any right under the Consumer Credit Protection Act.''
Read on for more details...
http://www.federalr eserve.gov/ boarddocs/ supmanual/ cch/fair_ lend_reg_ b.pdf
I wonder if such / similar laws exist in other countries; and what have been practical implications of this Act in USA? Will look forward to hear back.
Best,
anuj
Anuj K. Jain
Sr. Coady Fellow| Microfinance and Development| COADY International Institute
St. Francis Xavier University, Antigonish, Nova Scotia, B2G 2W5| Ph: 902-872-0521
[cid:image001. jpg@ 01CADFB8. 12862C40]
Reply to sender <mailto:meyer.19@osu. edu?subject=Re% 3A%20The% 20Equal%20Credit %20Opportunity% 20Act%20% 2F%20USA> . Reply to group <mailto:MicrofinancePractic e@yahoogroups. com?subject=Re% 3A%20The% 20Equal%20Credit %20Opportunity% 20Act%20% 2F%20USA> . Reply via Web Post <http://groups. yahoo.com/ group/Microfinan cePractice/ post;_ylc= X3oDMTJyN2d2cThs BF9TAzk3MzU5NzE1 BGdycElkAzMyNDAy NjQEZ3Jwc3BJZAMx NzA1MDAxMjQyBG1z Z0lkAzE1MDU0BHNl YwNkbXNnBHNsawNy cGx5BHN0aW1lAzEz OTI3MzAzNTk- ?act=reply&messa geNum=15054> . All Messages (3) <http://groups. yahoo.com/ group/Microfinan cePractice/ message/15053; _ylc=X3oDMTM3Zjh 1dXUwBF9TAzk3MzU 5NzE1BGdycElkAzM yNDAyNjQEZ3Jwc3B JZAMxNzA1MDAxMjQ yBG1zZ0lkAzE1MDU 0BHNlYwNkbXNnBHN sawN2dHBjBHN0aW1 lAzEzOTI3MzAzNTk EdHBjSWQDMTUwNTM -> . Top ^ <https://us-mg6. mail.yahoo. com/neo/launch? retry_ssl= 1#toc>
1c
Re: The Equal Credit Opportunity Act / USA <http://groups. yahoo.com/ group/Microfinan cePractice/ message/15055; _ylc=X3oDMTJyajJ ob2J2BF9TAzk3MzU 5NzE1BGdycElkAzM yNDAyNjQEZ3Jwc3B JZAMxNzA1MDAxMjQ yBG1zZ0lkAzE1MDU 1BHNlYwNkbXNnBHN sawN2bXNnBHN0aW1 lAzEzOTI3MzAzNTk ->
Tue Feb 18, 2014 4:05 am (PST) . Posted by:
"Anuj Jain" jainanuj <mailto:ajain@stfx.ca?subject=Re% 3A%20The% 20Equal%20Credit %20Opportunity% 20Act%20% 2F%20USA>
From my living in US during 2001-2005, I had some exposure to this debate, but must admit that I have not kept up on the subject since, except for the crisis in 2008 that was largely blamed on poor housing lending practices. Your brief analysis shows the double edginess of credit as a right. For Banks, damn if you do and damn if you don't. And yet, millions are excluded from capital access because of risk perception or prejudice, or both.
May be the experience of US with 'equal opportunity&# 39; act (and other places where such acts may exist) would be worth studying further; as we encourage policies shift in other countries. Would AFI be a good custodian to look into this?
Please do share if you can, anything else that may be available from US experience.
Regards,
Anuj
p.s. in my brief read of recent reports that showed up on google search; those reports suggest two important points. a. proportion of current risk on high-end real-estate defaults is very substantial in US market (63%!), and b. most of the defaults on housing loans have shifted from sub-prime to prime borrowers (which means, those with high credit rating are higher percentage of defaulters) after 2009 due to rising unemployment. I would search for papers that show, what percentage of defaults came from lower-end housing market in 2006-2008; to know the 'poverty- default&# 39; correlation. This reading is certainly interesting because otherwise, the image that pops-up around sub-prime crisis is those poor black communities or migrant Latino population ; which unfortunately perhaps shows my own prejudice. The reality perhaps was very different and more complex.
http://www.realtytr ac.com/content/ news-and- opinion/high- end-foreclosures -increasing- in-2013-bucking- national- trend-7945
http://economistsvi ew.typepad. com/economistsvi ew/2012/03/ the-changing- face-of-foreclos ures.html
http://t.www. na-businesspress .com/JAF/ GeanF_Web13_ 6_.pdf
From: MicrofinancePractic e@yahoogroups. com [mailto:Microfinanc ePractic e@yahoogroups. com] On Behalf Of Meyer, Richard
Sent: Monday, February 17, 2014 10:22 PM
To: MicrofinancePractic e@yahoogroups. com
Subject: [MFP] RE: The Equal Credit Opportunity Act / USA
You probably know that there has been a large debate over the years in the US about redlining, the practice of outlining geographic areas of housing (may be poor, deteriorated, occupied by minorities) and make fewer or no loans within those areas. There have been many attempts to measure the phenomena, and reduce the problem through various means when it is found. I do not know about the current state of the research regarding the issue. It is argued that government policies to stimulate home ownership, including relaxed credit underwriting, is one of the causes behind the financial collapse a few years ago. There are allegations that minorities were charged higher rates and given tougher terms for loans made during this period. Dick
From: MicrofinancePractic e@yahoogroups. com<mailto: MicrofinancePrac tic e@yahoogroups. com<mailto: MicrofinancePrac tic%20e@yahoogro ups.%20com> > [mailto:Microfinanc ePractic e@yahoogroups. com] On Behalf Of Anuj Jain
Sent: Monday, February 17, 2014 10:59 AM
To: MicrofinancePractic e@yahoogroups. com<mailto: MicrofinancePrac tic e@yahoogroups. com<mailto: MicrofinancePrac tic%20e@yahoogro ups.%20com> >
Subject: [MFP] The Equal Credit Opportunity Act / USA
We in the sector have often talked and debated about 'right to capital or a loan', and if that is indeed a right, or is rather a privilege that one must earn by building one's credit worthiness. Some years ago, Prof. Yunus had created quite a debate by saying that it can be considered as a fundamental right.
Regardless of that debate, here is this example, from USA, of this Equal Credit Opportunity Act; which does not give a right to borrow, but at the same time, stops the lending institutions from discriminating against any group of people or individual for accessing credit.
Federal Fair Lending Regulations and Statutes
Equal Credit Opportunity
The Equal Credit Opportunity Act (ECOA) of 1974, which is implemented by the Board's Regulation B, applies to all creditors. The statute requires financial institutions and other firms engaged in the extension of credit to ''make credit equally available to all creditworthy customers without regard to sex or marital status.' ' Moreover, the statute makes it unlawful for ''any creditor to discriminate against any applicant with respect to any aspect of a credit transaction (1) on the basis of race, color, religion, national origin, sex or marital status, or age (provided the applicant has the capacity to contract); (2) because all or part of the applicant' s income derives from any public assistance program; or (3) because the applicant has in good faith exercised any right under the Consumer Credit Protection Act.''
Read on for more details...
http://www.federalr eserve.gov/ boarddocs/ supmanual/ cch/fair_ lend_reg_ b.pdf
I wonder if such / similar laws exist in other countries; and what have been practical implications of this Act in USA? Will look forward to hear back.
Best,
anuj
Anuj K. Jain
Sr. Coady Fellow| Microfinance and Development| COADY International Institute
St. Francis Xavier University, Antigonish, Nova Scotia, B2G 2W5| Ph: 902-872-0521
[cid:image001. jpg@ 01CF2C73. F6E41E40]
Reply to sender <mailto:ajain@stfx.ca?subject=Re% 3A%20The% 20Equal%20Credit %20Opportunity% 20Act%20% 2F%20USA> . Reply to group <mailto:MicrofinancePractic e@yahoogroups. com?subject=Re% 3A%20The% 20Equal%20Credit %20Opportunity% 20Act%20% 2F%20USA> . Reply via Web Post <http://groups. yahoo.com/ group/Microfinan cePractice/ post;_ylc= X3oDMTJyZWw5aWNs BF9TAzk3MzU5NzE1 BGdycElkAzMyNDAy NjQEZ3Jwc3BJZAMx NzA1MDAxMjQyBG1z Z0lkAzE1MDU1BHNl YwNkbXNnBHNsawNy cGx5BHN0aW1lAzEz OTI3MzAzNTk- ?act=reply&messa geNum=15055> . All Messages (3) <http://groups. yahoo.com/ group/Microfinan cePractice/ message/15053; _ylc=X3oDMTM3OTR oMmFmBF9TAzk3MzU 5NzE1BGdycElkAzM yNDAyNjQEZ3Jwc3B JZAMxNzA1MDAxMjQ yBG1zZ0lkAzE1MDU 1BHNlYwNkbXNnBHN sawN2dHBjBHN0aW1 lAzEzOTI3MzAzNTk EdHBjSWQDMTUwNTM -> . Top ^ <https://us-mg6. mail.yahoo. com/neo/launch? retry_ssl= 1#toc>
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Great to see such an affirmative policy creating impact in real numbers. Btw, would you have access to any study on India's priority sector lending policies on poverty lending?
Here is another view of how overall formal credit delivery is regionally skewed in Indian banking system.
[cid:image001.png@ 01CF2CA8. 796EB4E0]
Source: http://capitalmind. in/2013/04/ 30-of-all- bank-deposits- are-in-mumbai- and-delhi/
It provides some very useful insights.
the question remains: does an Act like Equal Credit Opportunity (of US) help reduce discrimination for poor/ marginalized at the systemic level? On the other hand, is the banking system justified in their credit policies to remain more cautious against higher risk communities / citizens? In a privatized banking system, where credit policy is legitimately a factor of depositors' safety and shareholders' return; what legitimate means and grounds do we have to argue against? ECOA seems to provide a middle-ground, ensuring transparency in information (if nothing else). But maybe not as effective in fighting discrimination as one would like?
Thanks and best regards,
Anuj
From: MicrofinancePractic e@yahoogroups. com [mailto:MicrofinancePractic e@yahoogroups. com] On Behalf Of Ratnesh
Sent: Tuesday, February 18, 2014 11:37 AM
To: microfinancepractic e@yahoogroups. com
Subject: Re: [MFP] Digest Number 3717
Dear Anuj,
You have raised a very pertinent issue regarding barriers that certain communities face related to access to finance. I would like to share the Indian experience on removing / reducing these barriers through concerted action at the highest levels of government.
As many of the members may recall that India had constituted a High Level Committee under the Chairmanship of Justice (Retired) Rajinder Sachar to gather data/ information for preparation of a comprehensive report on the social, economic and educational status of the Muslim community of India had made specific recommendations to remove these barriers. I would like to draw the attention of the members to a recent update on the status of compliance to these recommendations by the concerned ministries (http://www.minority affairs.gov. in/sites/ upload_files/ moma/files/ Sachar_Committee -Status_of_ Follow-up_ action_on_ decisions. pdf). The section on credit is relevant for the discussion as there is a gradual positive trend in improved access to credit by minorities.
The Union finance minister during his interim budget presentation made on 18 February 2014 madetwo announcements regarding financial access to excluded communities:
"Ten years ago, the minorities had 14,15,000 bank accounts in 121 districts of India where there is a concentration of minorities. At the end of March, 2013, they had 43,52,000 accounts and the volume of lending had soared from INR 4,000 crore ($ 665 million) to INR 66,500 crore ($11 Billion). Loans to minority communities in the whole country stood at INR 211,451 crore ($ 35 billion) at the end of December 2013."
He has also proposed to provide an initial capital of INR 200 crore ($33 million) to set up a Venture Capital Fund for Scheduled Castes in order to promote entrepreneurship among the scheduled castes and to provide concessional finance to them.
It would be interesting to further examine the impact of these positive developments on the financial access questions that are being raised in various fora.
Best regards
Ratnesh
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3 Messages
Digest #3717
1a
The Equal Credit Opportunity Act / USA <https://us-mg6. mail.yahoo. com/neo/launch? retry_ssl= 1#1a> by "Anuj Jain" jainanuj
1b
Re: The Equal Credit Opportunity Act / USA <https://us-mg6. mail.yahoo. com/neo/launch? retry_ssl= 1#1b> by "Meyer, Richard"
1c
Re: The Equal Credit Opportunity Act / USA <https://us-mg6. mail.yahoo. com/neo/launch? retry_ssl= 1#1c> by "Anuj Jain" jainanuj
Messages
1a
The Equal Credit Opportunity Act / USA <http://groups. yahoo.com/ group/Microfinan cePractice/ message/15053; _ylc=X3oDMTJyYmk 4ZWxqBF9TAzk3MzU 5NzE1BGdycElkAzM yNDAyNjQEZ3Jwc3B JZAMxNzA1MDAxMjQ yBG1zZ0lkAzE1MDU zBHNlYwNkbXNnBHN sawN2bXNnBHN0aW1 lAzEzOTI3MzAzNTk ->
Mon Feb 17, 2014 8:20 am (PST) . Posted by:
"Anuj Jain" jainanuj <mailto:ajain@stfx.ca?subject=Re% 3A%20The% 20Equal%20Credit %20Opportunity% 20Act%20% 2F%20USA>
We in the sector have often talked and debated about 'right to capital or a loan', and if that is indeed a right, or is rather a privilege that one must earn by building one's credit worthiness. Some years ago, Prof. Yunus had created quite a debate by saying that it can be considered as a fundamental right.
Regardless of that debate, here is this example, from USA, of this Equal Credit Opportunity Act; which does not give a right to borrow, but at the same time, stops the lending institutions from discriminating against any group of people or individual for accessing credit.
Federal Fair Lending Regulations and Statutes
Equal Credit Opportunity
The Equal Credit Opportunity Act (ECOA) of 1974, which is implemented by the Board's Regulation B, applies to all creditors. The statute requires financial institutions and other firms engaged in the extension of credit to ''make credit equally available to all creditworthy customers without regard to sex or marital status.' ' Moreover, the statute makes it unlawful for ''any creditor to discriminate against any applicant with respect to any aspect of a credit transaction (1) on the basis of race, color, religion, national origin, sex or marital status, or age (provided the applicant has the capacity to contract); (2) because all or part of the applicant' s income derives from any public assistance program; or (3) because the applicant has in good faith exercised any right under the Consumer Credit Protection Act.''
Read on for more details...
http://www.federalr eserve.gov/ boarddocs/ supmanual/ cch/fair_ lend_reg_ b.pdf
I wonder if such / similar laws exist in other countries; and what have been practical implications of this Act in USA? Will look forward to hear back.
Best,
anuj
Anuj K. Jain
Sr. Coady Fellow| Microfinance and Development| COADY International Institute
St. Francis Xavier University, Antigonish, Nova Scotia, B2G 2W5| Ph: 902-872-0521
[cid:image001. jpg@ 01CF2BD5. 3B5DDFB0]
Reply to sender <mailto:ajain@stfx.ca?subject=Re% 3A%20The% 20Equal%20Credit %20Opportunity% 20Act%20% 2F%20USA> . Reply to group <mailto:MicrofinancePractic e@yahoogroups. com?subject=Re% 3A%20The% 20Equal%20Credit %20Opportunity% 20Act%20% 2F%20USA> . Reply via Web Post <http://groups. yahoo.com/ group/Microfinan cePractice/ post;_ylc= X3oDMTJyZTM0bG5x BF9TAzk3MzU5NzE1 BGdycElkAzMyNDAy NjQEZ3Jwc3BJZAMx NzA1MDAxMjQyBG1z Z0lkAzE1MDUzBHNl YwNkbXNnBHNsawNy cGx5BHN0aW1lAzEz OTI3MzAzNTk- ?act=reply&messa geNum=15053> . All Messages (3) <http://groups. yahoo.com/ group/Microfinan cePractice/ message/15053; _ylc=X3oDMTM3cmV ub2xvBF9TAzk3MzU 5NzE1BGdycElkAzM yNDAyNjQEZ3Jwc3B JZAMxNzA1MDAxMjQ yBG1zZ0lkAzE1MDU zBHNlYwNkbXNnBHN sawN2dHBjBHN0aW1 lAzEzOTI3MzAzNTk EdHBjSWQDMTUwNTM -> . Top ^ <https://us-mg6. mail.yahoo. com/neo/launch? retry_ssl= 1#toc>
1b
Re: The Equal Credit Opportunity Act / USA <http://groups. yahoo.com/ group/Microfinan cePractice/ message/15054; _ylc=X3oDMTJydWl udmNiBF9TAzk3MzU 5NzE1BGdycElkAzM yNDAyNjQEZ3Jwc3B JZAMxNzA1MDAxMjQ yBG1zZ0lkAzE1MDU 0BHNlYwNkbXNnBHN sawN2bXNnBHN0aW1 lAzEzOTI3MzAzNTk ->
Mon Feb 17, 2014 6:22 pm (PST) . Posted by:
"Meyer, Richard" <mailto:meyer.19@osu. edu?subject=Re% 3A%20The% 20Equal%20Credit %20Opportunity% 20Act%20% 2F%20USA>
You probably know that there has been a large debate over the years in the US about redlining, the practice of outlining geographic areas of housing (may be poor, deteriorated, occupied by minorities) and make fewer or no loans within those areas. There have been many attempts to measure the phenomena, and reduce the problem through various means when it is found. I do not know about the current state of the research regarding the issue. It is argued that government policies to stimulate home ownership, including relaxed credit underwriting, is one of the causes behind the financial collapse a few years ago. There are allegations that minorities were charged higher rates and given tougher terms for loans made during this period. Dick
From: MicrofinancePractic e@yahoogroups. com [mailto:Microfinanc ePractic e@yahoogroups. com] On Behalf Of Anuj Jain
Sent: Monday, February 17, 2014 10:59 AM
To: MicrofinancePractic e@yahoogroups. com
Subject: [MFP] The Equal Credit Opportunity Act / USA
We in the sector have often talked and debated about 'right to capital or a loan', and if that is indeed a right, or is rather a privilege that one must earn by building one's credit worthiness. Some years ago, Prof. Yunus had created quite a debate by saying that it can be considered as a fundamental right.
Regardless of that debate, here is this example, from USA, of this Equal Credit Opportunity Act; which does not give a right to borrow, but at the same time, stops the lending institutions from discriminating against any group of people or individual for accessing credit.
Federal Fair Lending Regulations and Statutes
Equal Credit Opportunity
The Equal Credit Opportunity Act (ECOA) of 1974, which is implemented by the Board's Regulation B, applies to all creditors. The statute requires financial institutions and other firms engaged in the extension of credit to ''make credit equally available to all creditworthy customers without regard to sex or marital status.' ' Moreover, the statute makes it unlawful for ''any creditor to discriminate against any applicant with respect to any aspect of a credit transaction (1) on the basis of race, color, religion, national origin, sex or marital status, or age (provided the applicant has the capacity to contract); (2) because all or part of the applicant' s income derives from any public assistance program; or (3) because the applicant has in good faith exercised any right under the Consumer Credit Protection Act.''
Read on for more details...
http://www.federalr eserve.gov/ boarddocs/ supmanual/ cch/fair_ lend_reg_ b.pdf
I wonder if such / similar laws exist in other countries; and what have been practical implications of this Act in USA? Will look forward to hear back.
Best,
anuj
Anuj K. Jain
Sr. Coady Fellow| Microfinance and Development| COADY International Institute
St. Francis Xavier University, Antigonish, Nova Scotia, B2G 2W5| Ph: 902-872-0521
[cid:image001. jpg@ 01CADFB8. 12862C40]
Reply to sender <mailto:meyer.19@osu. edu?subject=Re% 3A%20The% 20Equal%20Credit %20Opportunity% 20Act%20% 2F%20USA> . Reply to group <mailto:MicrofinancePractic e@yahoogroups. com?subject=Re% 3A%20The% 20Equal%20Credit %20Opportunity% 20Act%20% 2F%20USA> . Reply via Web Post <http://groups. yahoo.com/ group/Microfinan cePractice/ post;_ylc= X3oDMTJyN2d2cThs BF9TAzk3MzU5NzE1 BGdycElkAzMyNDAy NjQEZ3Jwc3BJZAMx NzA1MDAxMjQyBG1z Z0lkAzE1MDU0BHNl YwNkbXNnBHNsawNy cGx5BHN0aW1lAzEz OTI3MzAzNTk- ?act=reply&messa geNum=15054> . All Messages (3) <http://groups. yahoo.com/ group/Microfinan cePractice/ message/15053; _ylc=X3oDMTM3Zjh 1dXUwBF9TAzk3MzU 5NzE1BGdycElkAzM yNDAyNjQEZ3Jwc3B JZAMxNzA1MDAxMjQ yBG1zZ0lkAzE1MDU 0BHNlYwNkbXNnBHN sawN2dHBjBHN0aW1 lAzEzOTI3MzAzNTk EdHBjSWQDMTUwNTM -> . Top ^ <https://us-mg6. mail.yahoo. com/neo/launch? retry_ssl= 1#toc>
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Re: The Equal Credit Opportunity Act / USA <http://groups. yahoo.com/ group/Microfinan cePractice/ message/15055; _ylc=X3oDMTJyajJ ob2J2BF9TAzk3MzU 5NzE1BGdycElkAzM yNDAyNjQEZ3Jwc3B JZAMxNzA1MDAxMjQ yBG1zZ0lkAzE1MDU 1BHNlYwNkbXNnBHN sawN2bXNnBHN0aW1 lAzEzOTI3MzAzNTk ->
Tue Feb 18, 2014 4:05 am (PST) . Posted by:
"Anuj Jain" jainanuj <mailto:ajain@stfx.ca?subject=Re% 3A%20The% 20Equal%20Credit %20Opportunity% 20Act%20% 2F%20USA>
From my living in US during 2001-2005, I had some exposure to this debate, but must admit that I have not kept up on the subject since, except for the crisis in 2008 that was largely blamed on poor housing lending practices. Your brief analysis shows the double edginess of credit as a right. For Banks, damn if you do and damn if you don't. And yet, millions are excluded from capital access because of risk perception or prejudice, or both.
May be the experience of US with 'equal opportunity&# 39; act (and other places where such acts may exist) would be worth studying further; as we encourage policies shift in other countries. Would AFI be a good custodian to look into this?
Please do share if you can, anything else that may be available from US experience.
Regards,
Anuj
p.s. in my brief read of recent reports that showed up on google search; those reports suggest two important points. a. proportion of current risk on high-end real-estate defaults is very substantial in US market (63%!), and b. most of the defaults on housing loans have shifted from sub-prime to prime borrowers (which means, those with high credit rating are higher percentage of defaulters) after 2009 due to rising unemployment. I would search for papers that show, what percentage of defaults came from lower-end housing market in 2006-2008; to know the 'poverty- default&# 39; correlation. This reading is certainly interesting because otherwise, the image that pops-up around sub-prime crisis is those poor black communities or migrant Latino population ; which unfortunately perhaps shows my own prejudice. The reality perhaps was very different and more complex.
http://www.realtytr ac.com/content/ news-and- opinion/high- end-foreclosures -increasing- in-2013-bucking- national- trend-7945
http://economistsvi ew.typepad. com/economistsvi ew/2012/03/ the-changing- face-of-foreclos ures.html
http://t.www. na-businesspress .com/JAF/ GeanF_Web13_ 6_.pdf
From: MicrofinancePractic e@yahoogroups. com [mailto:Microfinanc ePractic e@yahoogroups. com] On Behalf Of Meyer, Richard
Sent: Monday, February 17, 2014 10:22 PM
To: MicrofinancePractic e@yahoogroups. com
Subject: [MFP] RE: The Equal Credit Opportunity Act / USA
You probably know that there has been a large debate over the years in the US about redlining, the practice of outlining geographic areas of housing (may be poor, deteriorated, occupied by minorities) and make fewer or no loans within those areas. There have been many attempts to measure the phenomena, and reduce the problem through various means when it is found. I do not know about the current state of the research regarding the issue. It is argued that government policies to stimulate home ownership, including relaxed credit underwriting, is one of the causes behind the financial collapse a few years ago. There are allegations that minorities were charged higher rates and given tougher terms for loans made during this period. Dick
From: MicrofinancePractic e@yahoogroups. com<mailto: MicrofinancePrac tic e@yahoogroups. com<mailto: MicrofinancePrac tic%20e@yahoogro ups.%20com> > [mailto:Microfinanc ePractic e@yahoogroups. com] On Behalf Of Anuj Jain
Sent: Monday, February 17, 2014 10:59 AM
To: MicrofinancePractic e@yahoogroups. com<mailto: MicrofinancePrac tic e@yahoogroups. com<mailto: MicrofinancePrac tic%20e@yahoogro ups.%20com> >
Subject: [MFP] The Equal Credit Opportunity Act / USA
We in the sector have often talked and debated about 'right to capital or a loan', and if that is indeed a right, or is rather a privilege that one must earn by building one's credit worthiness. Some years ago, Prof. Yunus had created quite a debate by saying that it can be considered as a fundamental right.
Regardless of that debate, here is this example, from USA, of this Equal Credit Opportunity Act; which does not give a right to borrow, but at the same time, stops the lending institutions from discriminating against any group of people or individual for accessing credit.
Federal Fair Lending Regulations and Statutes
Equal Credit Opportunity
The Equal Credit Opportunity Act (ECOA) of 1974, which is implemented by the Board's Regulation B, applies to all creditors. The statute requires financial institutions and other firms engaged in the extension of credit to ''make credit equally available to all creditworthy customers without regard to sex or marital status.' ' Moreover, the statute makes it unlawful for ''any creditor to discriminate against any applicant with respect to any aspect of a credit transaction (1) on the basis of race, color, religion, national origin, sex or marital status, or age (provided the applicant has the capacity to contract); (2) because all or part of the applicant' s income derives from any public assistance program; or (3) because the applicant has in good faith exercised any right under the Consumer Credit Protection Act.''
Read on for more details...
http://www.federalr eserve.gov/ boarddocs/ supmanual/ cch/fair_ lend_reg_ b.pdf
I wonder if such / similar laws exist in other countries; and what have been practical implications of this Act in USA? Will look forward to hear back.
Best,
anuj
Anuj K. Jain
Sr. Coady Fellow| Microfinance and Development| COADY International Institute
St. Francis Xavier University, Antigonish, Nova Scotia, B2G 2W5| Ph: 902-872-0521
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Tue Feb 18, 2014 10:29 am (PST) . Posted by:
"Jami Solli"
Thanks for sharing this: I think it raises the primary concerns that many
share about SROs. Also, where will their budgets come from if not the
member institutions?
Shouldn' t there be a budget allocation from the GoI if regulatory duties
are being performed by the SRO? Or, how does the State propose that the
SRO should be earning money?
Best,
Jami
On Mon, Feb 17, 2014 at 8:46 AM, Suran BS <suranbs@gmail. com> wrote:
>
>
>
> Some comments on self regulation in microFinance, which India is
> attempting. Pl see the link below:
>
>
>
> http://www.thehindu businessline. com/opinion/ can-microfinance -be-selfregulate d/article5685686 .ece
>
>
>
> ------------ --------- --------- --------- --------- --------- -
> twitter : suranbs
> *Please don't print this e-mail unless you really need to.*
>
>
>
share about SROs. Also, where will their budgets come from if not the
member institutions?
Shouldn' t there be a budget allocation from the GoI if regulatory duties
are being performed by the SRO? Or, how does the State propose that the
SRO should be earning money?
Best,
Jami
On Mon, Feb 17, 2014 at 8:46 AM, Suran BS <suranbs@gmail. com> wrote:
>
>
>
> Some comments on self regulation in microFinance, which India is
> attempting. Pl see the link below:
>
>
>
> http://www.thehindu businessline. com/opinion/ can-microfinance -be-selfregulate d/article5685686 .ece
>
>
>
> ------------ --------- --------- --------- --------- --------- -
> twitter : suranbs
> *Please don't print this e-mail unless you really need to.*
>
>
>
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