Senate Bill Would Outlaw Bank Discrimination for the First Time

Democrats in Congress have introduced legislation that would make it illegal for banks and other financial firms to discriminate against their customers because of their race, religion, sexual orientation and other characteristics — an effort meant to close a loophole in the Civil Rights Act highlighted in a New York Times report in June.

The Fair Access to Financial Services Act, introduced on Wednesday by members of the Senate Banking Committee, would explicitly outlaw discrimination against bank customers. Currently, it is legal for banks and some other businesses to treat some customers differently as long as those customers eventually receive the services they are seeking. That means, in practical terms, that banks can racially profile their customers and delay their transactions, or ask them to take extra steps to prove their legitimacy, without risking penalties as long as they eventually do business with those customers.

The loophole stems from the specificity of the Civil Rights Act of 1964, which lists the kinds of businesses — including movie theaters, restaurants and hotels — where discrimination is prohibited. Courts have ruled that the law does not apply to any businesses not on the list. That leaves customers who say they have been mistreated with little recourse, especially in states like Georgia, where there are no statewide anti-discrimination laws.

The bill stipulates that “all persons shall be entitled to the full and equal enjoyment of the goods, services, facilities, privileges and accommodations of financial institutions.” It is sponsored by Senators Sherrod Brown of Ohio, Tina Smith of Minnesota, Cory Booker and Robert Menendez of New Jersey, Elizabeth Warren of Massachusetts and Chris Van Hollen of Maryland.

The bill was written after The Times described the ways in which Black bank customers have been treated with suspicion and hostility while trying to do basic banking business. In one instance, a man seeking to withdraw cash from his Wells Fargo account to buy a car was turned away by a manager who threatened to call the police. In another, Wells Fargo employees called the police on a woman trying to cash a $200 check.

Because of the loophole in federal law, customers who experience discrimination can rely only on state protections when they seek justice.

“Too many Black and brown Americans experience racial profiling and unequal treatment when trying to access services at banks and other financial institutions,” Senator Brown said in an announcement of the bill emailed to The Times. “Victims of discrimination are not even able to hold financial institutions accountable — it is shameful.”

The two-and-a-half page bill lays out what bank customers who experience discrimination can do about it: Ask a federal court to order the bank or financial institution to cease the mistreatment and recoup lawyers’ fees from the institution if the court rules in their favor.

“Our legislation would be a clear and comprehensive statement that discrimination has no place in our financial system,” Senator Smith said in the announcement.

The bill has been endorsed by civil rights groups like the N.A.A.C.P., UnidosUS and the National Urban League, according to the announcement.

Two Democrats on the House Financial Services Committee, Representatives Hank Johnson of Georgia and Joyce Beatty of Ohio, will introduce a complementary bill, according to the Senate announcement.

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