Recently, the Consumer Financial Protection Bureau (CFPB) and the Department of Justice (DOJ) in the United States revoked a guidance issued during the Biden administration that prohibited financial institutions from discriminating against immigrants, sparking concerns about potential discrimination by banks. Epoch Times invited senior immigration lawyer Zhou Mei to analyze the policy changes and share possible responses.
The original guidance was issued by former President Biden in 2023, clarifying that financial institutions could consider an applicant’s immigration or citizenship status during loan application reviews, as long as this factor was not the sole consideration, as it would constitute discrimination and violate the law.
Although federal law in the United States, such as the Equal Credit Opportunity Act (ECOA), already prohibits financial institutions from engaging in discriminatory practices, Biden’s guidance aimed to further clarify and enhance enforcement to prevent discrimination from occurring.
When banks decide whether to lend, they do indeed review immigration status, raising the question of whether the bank is discriminating against immigrants during the review process or not. This directly relates to potential legality issues for the bank.
The Trump administration believed that the guidance placed excessive emphasis on the risk of “discriminating against immigrants” during the review process, potentially leading to misconceptions that banks cannot collect immigration-related information such as Social Security Numbers (SSNs), which are crucial for compliance with anti-money laundering (AML) and Know Your Customer (KYC) regulations.
Zhou Mei believes that Trump’s revocation intends to remind banks to consider the risks behind immigration status, such as the potential for money laundering or impacts on repayment ability, rather than targeting immigrants themselves. She stated, “In this situation, it is not discrimination but rather singling out a specific risk.”
She further added, “If immigration is treated as an isolated factor and not tied to risk assessment and the source of funds, it likely violates the ECOA.”
Some former CFPB officials and consumer finance lawyers, such as Kris Kully from Mayer Brown, are concerned that this revocation may be interpreted as allowing financial institutions to require applicants to have a valid SSN, potentially excluding even creditworthy immigrants.
Last April, the Trump administration began encouraging undocumented immigrants to depart voluntarily. One measure included invalidating SSNs issued during Temporary Protected Status (TPS) periods.
Zhou Mei believes that the revocation may create obstacles for immigrant loan approvals and reduce options, but creditworthy immigrants with repayment capability should not be excluded by banks.
She noted that many banks have long been reluctant to lend to immigrants, such as for agricultural loans or to individuals with only work visas.
Zhou Mei suggested that individuals who face difficulty obtaining loans from one bank should consider switching to another one.
In a market-driven scenario, lenders will consider lending money to individuals they believe are creditworthy. For example, many engineers in Silicon Valley with annual incomes ranging from $300,000 to $500,000 may hold work visas. When they seek mortgage loans, banks will consider factors such as their professional background, income, and potential risks associated with immigration status.
Zhou Mei explained that certain Asian-backed banks understand that Asians typically do not default on debts. Even if an individual’s income does not look impressive on paper but they are actually wealthy, the bank may approve the loan, benefiting both parties.
She believes that lenders cannot resist the urge to conduct business and will act according to their best interests.
Zhou Mei expressed her opinion that the current administration under Trump aims to prevent foreigners from taking away American jobs.
During a recent visit to San Francisco, she noticed a decrease in homeless individuals on the streets. An Uber driver mentioned that they had left due to ICE crackdowns. She trusts that Trump’s policies will address various issues.
Zhou Mei remarked, “His (Trump’s) basic stance is, ‘Do not come here to compete for our jobs.'”