Michael S Barr: Furthering the vision of the Fair Housing Act

Speech by Mr Michael S Barr, Vice Chair for Supervision of the Board of Governors of the Federal Reserve System, at the "Fair Housing at 55 - Advancing a Blueprint for Equity" National Fair Housing Alliance 2023 National Conference, Washington DC, 18 July 2023. 

Central bank speech  | 
18 July 2023
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 |  9 pages

Thank you for the invitation to join you in commemorating 55 years since the Fair Housing Act became law. Along with the Voting Rights Act, the Fair Housing Act was an essential step in making good on the promise of the Civil Rights Act, and of the vision of Dr. Martin Luther King, to build a fair and equal society. Let me also acknowledge the work of the National Fair Housing Alliance (NFHA), its members, and their partner organizations in pursuit of this goal.

As with other aspects of America's journey toward equality, today we can recognize the progress made in fair housing while also acknowledging how much farther we have to go and recommitting ourselves to reaching that destination. We need to do that because everyone deserves a fair and equal opportunity. And as we saw in the global financial crisis, failure to pay attention to discriminatory and predatory practices can have a devastating effect on our economy.

Fair Lending Supervision and Enforcement

I'll start with a few words on the Federal Reserve's role in eradicating discrimination in lending. As we are here to commemorate, Congress acted in 1968 to make discrimination in housing illegal with the Fair Housing Act, and it passed the Equal Credit Opportunity Act (ECOA) in 1974 to bar lending discrimination.

These landmark laws-now 55 and 40 years old-are the foundation of the Federal Reserve's work in this area, we use our supervisory and enforcement authority to ensure these laws are followed. Fair lending violations can come in the form of disparate treatment, which is when a lender treats a credit applicant differently on the basis of a prohibited factor, as well as disparate impact, when a lender applies a racially neutral policy or practice that disproportionately excludes or burdens certain persons on a prohibited basis. We believe that the disparate impact test is an important tool to ensure that lending decisions are fair.