A recent Biden administration dictate warns lenders to be wary of discriminating against people here illegally. Why?
Commentary
Earlier this month, the Consumer Protection Finance Bureau and the Justice Department issued a warning to lenders to remind “financial institutions that all credit applicants are protected from discrimination on the basis of their national origin, race and other characteristics covered by the Equal Credit Opportunity Act (ECOA), regardless of their immigration status.”
It’s unclear how the phrase “
immigration status“ applies in the context of the ECOA warning. ”Immigration status“ encompasses a broad array of categories, from natural-born citizens to permanent ”green card” residents, asylum-seekers and refugees, student visa holders, work visa holders, tourists, and, yes, people here illegally.
Typically, citizens, resident aliens, “green card” holders, and certain other non-citizens can obtain a Social Security number (SSN) if they are authorized to work in the United States. But other non-citizen residents who aren’t authorized to work can also obtain an SSN that says, “Not Valid for Work.” Such people would be non-citizen residents who are applying, for example, for government benefits. People who are here illegally—those who have overstayed a visa or who have entered the country illegally—cannot get an SSN.
“There is no shortage of credit cards you can qualify for even if you don’t have a Social Security number. Many card issuers allow applicants to use an Individual Taxpayer Identification Number as a substitute. And with an ITIN, you’ll still be able to apply for various types of credit cards you’d like.”
ITINs were first issued in the Clinton administration so that foreign nationals not eligible for an SSN could comply with the all-encompassing (and I would say overreaching) aspects of the U.S. tax code. But the bureaucracy made the boneheaded mistake of making ITINs a nine-digit number so that they are indiscernible from SSNs! There is even at least one startup financial services company,
Maza, that specifically targets illegal aliens, and its assistance in
getting an ITIN for prospective clients is in its marketing.
Few would argue with the claim that people legally resident in the United States by whatever means should not be prohibited from accessing the U.S. financial system for banking and credit purposes or government benefits to which they are entitled, as in the case of, e.g., the surviving spouse of a citizen. But the joint ECOA warning is to lenders, and it isn’t clear whether a lender who refuses a loan or a credit card to an illegal alien for fear of the borrower returning to his or her native country would invite scrutiny under the ECOA. We inquired, several times, with a spokesman for the CFPB to discuss that very situation and were referred back to the joint ECOA statement, so our question remains.
Let’s Stop This
The ECOA statement and the failure of the CFPB or the Justice Department to clarify that it doesn’t apply to lenders who give added scrutiny to illegal aliens as part of their lending process is troubling. It’s another step in the process by which the unelected federal bureaucracy seems to normalize aliens living illegally in the United States. It is also a significant risk to national security, knowing what we know about how the 9/11 hijackers financed their terrorism. None of them had even an ITIN but were able to open checking accounts, get debit cards, and receive wire transfers.The first consideration of loan officers and others who make lending decisions should be the creditworthiness of the borrower. Although anyone could abscond with the proceeds of a borrowing to another country, citizens and aliens living here legally create enough of a paper trail to pursue the deadbeat to another country for collection. That’s not true with someone here illegally. Good luck tracking them down, because one can obtain an ITIN using a variety of foreign, easily forged
documents.
Those of us who live in New York City are quite familiar with what happens when you make life easy for people who ignore or exploit loopholes in overly generous U.S. immigration laws. Our city is overwhelmed by purported asylum-seekers who will cost the city $12 billion in additional, unbudgeted costs. Nationally, there are multiple reports that some of these purported “asylum seekers” provide phony addresses when they are released from custody. (And of course, that’s only for those who are caught. Our government has no idea where fully illegal aliens are now.)
How about instead of harassing lenders with a nebulous warning that they may be violating the ECOA, thereby putting responsible lenders at risk of loss, they instead assure them that no lender will be sanctioned for refusing to lend to a person not legally authorized to be in the United States? And how about we tighten up our banking system beyond the vaunted “
Know Your Customer“ rules so that bankers can distinguish an SSN from an ITIN and ensure that both numbers are verifiable against a national database?
