Policing financial predators

WASHINGTON– Section 740B of S. 3217 would enact a cherished goal of minority business and fair lending advocates — mandatory record keeping of business lending to minority-owned small businesses. Democrats brought the bill to the floor Monday following a push by President Barack Obama in a Wall Street speech and weekend radio conversation. Under former Chairman Alan Greenspan, the Federal Reserve had refused to require the record keeping, as has been done for residential mortgages for 30 years.
Access to capital has been the number one complaint of African-American businesses, in a number of research studies, hampering growth and employment, even in economic boom times. Lack of credit and venture capital is a key contributor to the high unemployment in African-American communities, although much of the capital used for speculative ventures comes from pension funds contributed on behalf of average working people. Walls Come Tumbling Down: State of Black Business, sixth edition, describes how insufficient business credit hampers black business growth. The section reads::
`”(a) Purpose- The purpose of this section is to facilitate enforcement of fair lending laws and enable communities, governmental entities, and creditors to identify business and community development needs and opportunities of women-owned and minority-owned small businesses.
• `(b) Information Gathering- Subject to the requirements of this section, in the case of any application to a financial institution for credit for a small business, the financial institution shall–
• `(1) inquire whether the small business is a women- or minority-owned small business, ”

The bill also creates a consumer protection bureau in the Fed, instead of an independent agency as the Presidient and others have advocated. It would include an office of fair lending and equal opportunity and an office of financial literacy. Pilot programs would be established to help borrowers avoid pay-day loans and acquire checking accounts at community development financial institutions.
The bureau would have the authority to draft rules against deceptive financial products, whether from depository institutions or brokers.
Negotiations with Republican senators are taking place to allow a vote on the measure, which would go to conference.
The House of Representatives has already passed a version with stronger consumer protection provisions.
After the passage of health reform, financial regulatory changes gained new momentum.