The ICE-ification of Financial Regulation: steal their savings, especially the money they planned to send to their families at home
by Philip
Mattera, director of the Corporate
Research Project of Good Jobs First for the
Now the Trump Administration is starting to enlist banks in
a more questionable form of information gathering involving the immigration
status of their customers. For months, there have been reports that the
administration is planning to require banks to determine whether customers are
U.S. citizens.
That has not yet happened, but a recent executive
order from the White House takes a step in that direction by advising
banks to “be attentive to the credit risks posed by the extension of mortgage
and auto loans, credit cards, and other consumer credit to the inadmissible and
removable alien population.” The order calls on the Treasury Department
and financial regulators such as the Fed and the FDIC to develop changes to the
Bank Secrecy Act to address this supposed risk.
This sounds like a prelude to more explicit rules that would
bar banks from doing business with undocumented immigrants.
It was surprising to see a reference in the executive order to the Consumer Financial Protection Bureau, an agency that the administration appeared to have demolished as part of the DOGE onslaught last year. The CFPB was urged to tell banks that they should consider immigration status in assessing a borrower’s ability to repay a loan.
Now the agency, headed by OMB Director Russell Vought, has
sprung back to life with guidance that
does exactly that. The Washington Post reports that
the CFPB is also beginning to investigate smaller, non-profit lenders, which
tend to operate in communities with higher percentages of immigrant residents.
All this is part of an expanding effort by the Trump
Administration to make life more difficult for immigrants by restricting their
access to financial services, among other things. By raising the misery level,
Trump hopes that more of the undocumented will self-deport.
It is ironic that the administration is pushing more people
out of the banking system at the same time it is dialing up its campaign
against debanking, the baseless claim that financial institutions have been
denying services based on ideological or religious considerations. It has just
come to light that Jeanine Pirro, the U.S. Attorney in DC, has sent subpoenas
to the likes of JPMorgan Chase and Bank of America to look for evidence of the
purported practice.
This effort, which stems from Trump’s ongoing resentment at
banks that dissociated themselves from him and his family businesses in the
immediate wake of the January 6 insurrection, will probably go nowhere.
The administration’s own debanking efforts against
immigrants are a more serious problem. These moves will increase the financial
insecurity of families headed by non-citizens, pushing them out of more stable
jobs into precarious employment.
This, in turn, will have consequences for the population at
large. When people turn to off-the-books work, they stop contributing payroll
taxes that support the Social Security and Medicare programs. Social Security’s
trustees have just issued a new report that lists the shrinking of the
immigrant population as one of the factors weakening the financial condition of
the system.
At the same time, the weaponization of agencies such as the
CFPB against immigrants will serve to undermine the legitimacy of financial
regulation. The Bureau, which used to play a vital role in identifying and
punishing predatory lending, has abandoned that mission and is now, in effect,
being turned into an arm of the much-reviled ICE. The scammers could not be
happier.
