House Financial Services Committee Holds Hearing on Achieving Racial Equity through Fair Access to Housing and Financial Services

The Senate Banking, Housing and Urban Affairs (BHUA) on April 13 held a remote hearing, “Separate and Unequal: The Legacy of Racial Discrimination in Housing.” The hearing addressed the legacy of racial discrimination in housing including the history of exclusionary zoning policies, redlining, denial of loans and predatory lending practices to communities of color, and the historic impact of leaving communities of color out of many New Deal opportunities. The committee and invited witnesses reflected on the nation’s history of exclusion in federal housing policy, the Fair Housing Act, and what can Congress do to address inequities in upcoming legislation.

Witnesses included Richard Rothstein, author of Color of Law and senior fellow emeritus of the NAACP Legal Defense and Education Fund; Lisa Rice, president and CEO of the National Fair Housing Alliance; Jason Reece, assistant professor of city and regional planning at the Knowlton School of Architecture at the Ohio State University; Howard Husock, American Enterprise Institute adjunct fellow and contributing editor at City Journal and the Manhattan Institute; and Tobias Peter, research fellow and director of research at American Enterprise Institute’s Housing Center. 

In response to Chairman Sherrod Brown’s (D-OH) question on how new legislation can ensure new investments in infrastructure that help the economy broadly while also addressing racial and economic inequality, Lisa Rice responded, “The first thing we have to do is, first understand that infrastructure is housing. When you think of all of the infrastructure bills that the nation has passed [before], those infrastructure bills had a great impact on people’s ability to sustain their housing, it disrupted homeownership opportunities for many communities of color, and it helps create residential segregation. So, we have to keep that in mind when we are implementing this particular infrastructure bill.”

When asked by Senator Bob Menendez (D-NJ) whether an upcoming infrastructure bill can address economic and racial disparities through coordination of transportation and economic investments, Jason Reece responded, “Absolutely. We know that the alignment of transportation infrastructure and housing is critical—primarily in the context of allowing for greater workforce mobility. In addition to that, it helps us think proactively in terms of understanding that with the transportation investments we see in particular in our urban neighborhoods, property values will go up and we can potentially stabilize housing to make sure those neighborhoods stay affordable and accessible.” Reece went on to reaffirm to Senator Menendez that including this coordination between transportation, housing, and equitable access to jobs will be essential to address disparities in the infrastructure package.

Senator Van Hollen (D-MD) raised the issue of “racial-neutral” policies to Richard Rothstein, who had addressed this topic in his book. Rothstein used the example of Baltimore’s Red Line, a planned mass transit light rail line for the city of Baltimore that would have connected Black residents to jobs, shopping, and other housing opportunities. The cancellation of this project by Maryland Governor Larry Hogan was investigated by the Department of Transportation for a potential violation of the Civil Rights Act. Rothstein stated that “this should have been deemed a violation of the Fair Housing Act because it has a disparate impact on African Americans.” This example highlights that just because a federal policy is seemingly “race-neutral,” it can often have a disparate impact against communities of color and low-income communities if equity is not taken into consideration in its planning and implementation.

Senator Tim Scott (R-SC) emphasized the need for greater opportunity for renters to have access to homeownership, including expansion of criteria for aspiring homeowners to be deemed creditworthy. “So many of the GSEs [government sponsored enterprises] do not consider what is simple…we are not using the information. We should change the model so that those who are creditworthy have a chance to be homeowners, it's that simple.” Senator Scott asked Lisa Rice and Tobias Peter their thoughts on his statement. Rice reflected on her previous career as a loan underwriter and on the criteria she used to determine if a consumer was creditworthy and able to pay their mortgage obligation—what is the consumer’s current housing payment, how well does one pay their rent, and what is the current housing payment track. These criteria are no longer being implemented in the underwriting process due in part there is no system for tracking that information at the federal level. Tobias Peter concurred with Senator Scott that expanding the number of variables in understanding someone’s creditworthiness will help improve people’s access to homeownership by looking at the entire financial picture of a borrower. 

In Dr. Rothstein’s testimony, he reflected on the upcoming legislation and the potential impact that it can have on redressing the nation’s discriminatory housing, lending, and infrastructure practices:

“This moment presents an opportunity, that Congress must rise to meet. For the resilience of the country, economic prosperity, and the stability and prosperity of the American people, this moment demands Congress undertake a bold, comprehensive approach to the housing and infrastructure crisis. At this critical point in history, it is of paramount importance that any infrastructure bill addresses the impact of the deliberate and flawed policies of the past…Discussions of housing as infrastructure must be grounded in the context of affordability.”

Watch the full hearing, read witness testimonies, and find related legislation at: