The following post appears courtesy of Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. It originally appeared as a letter to the editor of the Wall Street Journal.
Mary Kissel's "Justice's New War Against Lenders" (op-ed, Aug. 31) accuses the Justice Department of politicized enforcement of fair lending laws and claims that the department's fair lending enforcement practices would create another housing crisis.
Contrary to Ms. Kissel's assertion, the Justice Department's focus on fair lending enforcement is precisely what is needed to ensure that all qualified borrowers have equal access to fair and responsible lending, as is required by law. Common-sense consumer protection and promoting a sound climate for lending go hand in hand and are inextricably intertwined. The absence of effective consumer protections and the dearth of meaningful federal enforcement in recent years not only hurt communities across the country, but also brought about staggering losses in the industry and undermined the safety and soundness of so many lending institutions.
The suggestion that the department, as part of its settlements, is forcing banks to lower their underwriting standards and make loans to unqualified borrowers is simply wrong. Our settlement agreements repeatedly refer to extensions of credit being made to "qualified applicants" only and make clear that no provision in the agreements require banks to make an unsafe or unsound loan.
What Ms. Kissel and other critics refuse to acknowledge is that the failure of some lending institutions to offer credit to qualified borrowers—who were disqualified for loans not because of their creditworthiness but solely based on race—in minority neighborhoods on the same basis as qualified borrowers in nonminority neighborhoods, was one of the factors that contributed to the subprime lending boom and subsequent crisis. When good lenders fail to serve entire communities, it creates a vacuum ready to be filled by predatory players.
All qualified home buyers should have access to sustainable credit without being subject to illegal discrimination. The Justice Department will unapologetically continue to ensure they can do so.