[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]


                      EXAMINING DISCRIMINATION AND
                       OTHER BARRIERS TO CONSUMER
                       CREDIT, HOMEOWNERSHIP, AND
                      FINANCIAL INCLUSION IN TEXAS

=======================================================================

                             FIELD HEARING

                               BEFORE THE

                       SUBCOMMITTEE ON OVERSIGHT
                           AND INVESTIGATIONS

                                 OF THE

                    COMMITTEE ON FINANCIAL SERVICES

                     U.S. HOUSE OF REPRESENTATIVES

                     ONE HUNDRED SIXTEENTH CONGRESS

                             FIRST SESSION

                               __________

                           SEPTEMBER 4, 2019

                               __________

       Printed for the use of the Committee on Financial Services

                           Serial No. 116-45
                           
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]	  


                              __________
                               

                    U.S. GOVERNMENT PUBLISHING OFFICE                    
42-313 PDF                  WASHINGTON : 2020                     
          
--------------------------------------------------------------------------------------




                 HOUSE COMMITTEE ON FINANCIAL SERVICES

                 MAXINE WATERS, California, Chairwoman

CAROLYN B. MALONEY, New York         PATRICK McHENRY, North Carolina, 
NYDIA M. VELAZQUEZ, New York             Ranking Member
BRAD SHERMAN, California             PETER T. KING, New York
GREGORY W. MEEKS, New York           FRANK D. LUCAS, Oklahoma
WM. LACY CLAY, Missouri              BILL POSEY, Florida
DAVID SCOTT, Georgia                 BLAINE LUETKEMEYER, Missouri
AL GREEN, Texas                      BILL HUIZENGA, Michigan
EMANUEL CLEAVER, Missouri            SEAN P. DUFFY, Wisconsin
ED PERLMUTTER, Colorado              STEVE STIVERS, Ohio
JIM A. HIMES, Connecticut            ANN WAGNER, Missouri
BILL FOSTER, Illinois                ANDY BARR, Kentucky
JOYCE BEATTY, Ohio                   SCOTT TIPTON, Colorado
DENNY HECK, Washington               ROGER WILLIAMS, Texas
JUAN VARGAS, California              FRENCH HILL, Arkansas
JOSH GOTTHEIMER, New Jersey          TOM EMMER, Minnesota
VICENTE GONZALEZ, Texas              LEE M. ZELDIN, New York
AL LAWSON, Florida                   BARRY LOUDERMILK, Georgia
MICHAEL SAN NICOLAS, Guam            ALEXANDER X. MOONEY, West Virginia
RASHIDA TLAIB, Michigan              WARREN DAVIDSON, Ohio
KATIE PORTER, California             TED BUDD, North Carolina
CINDY AXNE, Iowa                     DAVID KUSTOFF, Tennessee
SEAN CASTEN, Illinois                TREY HOLLINGSWORTH, Indiana
AYANNA PRESSLEY, Massachusetts       ANTHONY GONZALEZ, Ohio
BEN McADAMS, Utah                    JOHN ROSE, Tennessee
ALEXANDRIA OCASIO-CORTEZ, New York   BRYAN STEIL, Wisconsin
JENNIFER WEXTON, Virginia            LANCE GOODEN, Texas
STEPHEN F. LYNCH, Massachusetts      DENVER RIGGLEMAN, Virginia
TULSI GABBARD, Hawaii
ALMA ADAMS, North Carolina
MADELEINE DEAN, Pennsylvania
JESUS ``CHUY'' GARCIA, Illinois
SYLVIA GARCIA, Texas
DEAN PHILLIPS, Minnesota

                   Charla Ouertatani, Staff Director
              Subcommittee on Oversight and Investigations

                        AL GREEN, Texas Chairman

JOYCE BEATTY, Ohio                   ANDY BARR, Kentucky, Ranking 
STEPHEN F. LYNCH, Massachusetts          Member
NYDIA M. VELAZQUEZ, New York         BILL POSEY, Florida
ED PERLMUTTER, Colorado              LEE M. ZELDIN, New York, Vice 
RASHIDA TLAIB, Michigan                  Ranking Member
SEAN CASTEN, Illinois                BARRY LOUDERMILK, Georgia
MADELEINE DEAN, Pennsylvania         WARREN DAVIDSON, Ohio
SYLVIA GARCIA, Texas                 JOHN ROSE, Tennessee
DEAN PHILLIPS, Minnesota             BRYAN STEIL, Wisconsin
                            
                            
                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on:
    September 4, 2019............................................     1
Appendix:
    September 4, 2019............................................    57

                               WITNESSES
                      Wednesday, September 4, 2019

Ardoin, Raymond, President, Board of Directors, Brentwood Baptist 
  Church Federal Credit Union....................................    29
Asante-Muhammad, Dedrick, Chief, Race, Wealth, and Community, 
  National Community Reinvestment Coalition (NCRC)...............     8
Everette, Belinda, Director, Housing Initiative, NAACP Houston 
  Branch.........................................................     5
Johnson, George, CEO, George E. Johnson Development..............    28
Lindner, Gary, President and CEO, PeopleFund.....................    26
Park, Jeungho ``JP'', President and Chairman, Relationship 
  Bancshares, Inc................................................    40
Pena, Celina, Chief Advancement Officer, LiftFund................    25
Poyo, Noel Andres, Executive Director, National Association for 
  Latino Community Asset Builders (NALCAB).......................    21
Robinson, Judson III, CEO and Chair, Houston Area Urban League...     3
Smith, Jeff, President and CEO, Unity National Bank..............    23
Sun, Hua, Associate Professor of Finance, Iowa State University..    10
Wong, John, Founding Chair, Asian Real Estate Association of 
  America (AREAA)................................................     7

                                APPENDIX

Prepared statements:
    Ardoin, Raymond..............................................    58
    Asante-Muhammad, Dedrick.....................................    60
    Everette, Belinda............................................    63
    Lindner, Gary................................................    70
    Park, Jeungho ``JP''.........................................    72
    Pena, Celina.................................................    73
    Poyo, Noel...................................................    77
    Robinson, Judson III.........................................    81
    Smith, Jeff..................................................    86
    Sun, Hua.....................................................    92
    Wong, John...................................................    95

              Additional Material Submitted for the Record

Green, Hon. Al:
    Letter from City of Houston Housing & Community Development 
      Department.................................................    97
    Written statement of Community Home Lenders Association 
      (CHLA).....................................................   100
    Letter from Harris County Precinct One.......................   107
    Wells Fargo press release....................................   109
Garcia, Hon. Sylvia:
    Street map of Houston........................................   113

 
                      EXAMINING DISCRIMINATION AND
                       OTHER BARRIERS TO CONSUMER
                       CREDIT, HOMEOWNERSHIP, AND
                      FINANCIAL INCLUSION IN TEXAS

                              ----------                              


                      Wednesday, September 4, 2019

             U.S. House of Representatives,
                          Subcommittee on Oversight
                                and Investigations,
                           Committee on Financial Services,
                                                   Washington, D.C.
    The subcommittee met, pursuant to notice, at 10:17 a.m., at 
the Fountain Life Center, 14083 South Main Street, Houston, 
Texas, Hon. Al Green [chairman of the subcommittee] presiding.
    Members present: Representatives Green, Tlaib, and Garcia 
of Texas.
    Also present: Representatives Meeks, Clay, Cleaver, and 
Dingell.
    Chairman Green. The Oversight and Investigations 
Subcommittee will come to order.
    The title of today's subcommittee hearing is, ``Examining 
Discrimination and Other Barriers to Consumer Credit, 
Homeownership, and Financial Inclusion in Texas.''
    Without objection, the Chair is authorized to declare a 
recess of the subcommittee at any time. Also, without 
objection, Members of the House who are not members of this 
subcommittee may participate in today's hearing for the 
purposes of making an opening statement and questioning the 
witnesses.
    And, without objection, members of the local media who are 
invited to this hearing may engage in audio and visual coverage 
of the subcommittee's proceedings. Such coverage is solely to 
educate, enlighten, and inform the general public on an 
impartial basis of the subcommittee's operations and 
consideration of legislative issues, as well as developing an 
understanding and perspective on the U.S. House of 
Representatives and its role in our government. This coverage 
may not be used for any partisan political campaign purpose or 
be made available for such purpose.
    The Chair now recognizes himself for 5 minutes for an 
opening statement.
    Today's hearing marks the first field hearing I have 
convened in Texas in my capacity as Chair of the Oversight and 
Investigations Subcommittee. Therefore, it is fitting that this 
hearing focuses on a crucial topic for residents of Texas and 
the 9th Congressional District, namely, discrimination and 
other barriers to homeownership, credit, and affordable 
financial services.
    Whether for the financing of a home, for college tuition, 
for a new business, or for day-to-day living expenses, fair 
access to credit products, lenders, and services is at the 
heart of financial inclusion. Yet for too many Texans, a 
mortgage, credit card, or even a low-cost checking account that 
is free of hidden fees remain out of reach.
    This lack of access to affordable financial products and 
services is exacerbated by the events of the past decade. 
During this time, we have seen the number of minority-owned 
banks plummet from 44 African American-owned banks in 2007 to 
just 19 today; from 53 Hispanic-owned banks a decade ago to 
just 26 today; from 99 Asian American-owned banks in 2010 to 
just 63 today; and from 22 Native American-owned banks in 2010 
to just 18 today.
    Over the same period of time, the banking industry overall 
has witnessed a massive and continuing consolidation, such that 
today just eight megabanks hold fully half of all banking 
assets in America. Some things bear repeating: Eight megabanks 
hold fully half of all banking assets in America.
    Further exacerbating the problem of effective lending for 
minority-owned banks is the lack of capacity to fund the major 
projects that can aid small businesses in their development, as 
well as improve the quality of life in the community where the 
banks are located.
    For decades, regulators and researchers alike have found 
overwhelming evidence of invidious discrimination in mortgage 
lending, small business loans, and other financial products. 
This is unacceptable, and it must end.
    Prosecutors and think tanks have developed empirical 
evidence validating what our community knows all too well: 
Discrimination is a fact of life in the economic lives of 
minorities seeking access to housing in 2019, 51 years after 
the enactment of the Fair Housing Act. This is unacceptable, 
and it must end.
    Today, in 2019, 41 years since the Community Reinvestment 
Act was enacted, new research released just this week reveals a 
pattern of disinvestment, discouragement, and inequitable 
treatment of Black- and Hispanic-owned businesses, a pattern 
spanning the period from 2008 to 2016. This is unacceptable, 
and it must end.
    Some of the worst offenders in the financial industry have 
been charged, convicted, and punished with just a slap on the 
wrist for discriminatory and predatory practices against their 
own customers. But these recidivists continue, often repeating 
the same course of conduct and absorbing penalties and fines 
for discrimination as merely a cost of doing business, allowing 
the cycle to continue. This, too, is unacceptable, and it must 
end.
    Measured against the megabanks' record $780 billion in 
profits over the past decade, the $160 billion in fines they 
paid may become just another cost of doing business. If ever 
this state of affairs were deemed acceptable by some, it is no 
longer acceptable and it must end.
    We are convened here today in Houston, as Members of the 
Congress from around the nation, to begin the end of this form 
of invidious discrimination, the end of discrimination against 
small businesses, small businessmen and women seeking a fair 
shake when they apply for a loan, the end of disparate 
treatment against LGBTQ+ home buyers seeking a mortgage on the 
same terms as their straight and cisgender counterparts, and 
the end of financial institutions treating simply as a cost of 
doing business the billions in fines they pay for recurring 
discriminatory and predatory conduct against borrowers of 
color.
    It is my intention to explore the legal and policy 
solutions that will ensure that no one is left behind, such 
that finally, American economic life becomes truly inclusive 
and equitable.
    In conclusion, I wish to thank my colleagues, 
Representatives Cleaver, Clay, and Meeks, soon to be joined by 
Representative Tlaib, for making the trip here from Missouri, 
New York City, and Michigan. And of course, we have Ms. Garcia, 
who is my neighbor here in Texas, and I thank her for 
traversing the short distance and being here with us as well.
    I am pleased to be able to help to bring some visibility to 
critical issues of equity and fairness for all Americans. That 
is what this hearing is all about.
    And at this time, I would like to introduce our first panel 
of witnesses. I would like to extend a warm welcome to each of 
the witnesses.
    On our first panel, I am pleased to introduce now Judson 
Robinson III, CEO and Chair of the Houston Area Urban League; 
Belinda Everette, Director, Housing Initiative, NAACP Houston 
Branch; John Wong, Founding Chair, Asian Real Estate 
Association of America; Hua Sun, Associate Professor, Finance, 
Iowa State University; Dedrick Asante-Muhammad, Chief of Race, 
Wealth, and Community, National Community Reinvestment 
Coalition.
    Welcome to all of you, and thank you for being here. Each 
witness will be recognized for 5 minutes to give an oral 
presentation of their testimony. And without objection, the 
witnesses' written statements will be made a part of the 
record.
    Once the witnesses finish their testimony, each Member will 
have 5 minutes within which to ask questions. The timekeeper 
will signal when you have 1 minute remaining. As a matter of 
fact, this will be your 1-minute signal.
    [Timer sounding.]
    This will let you know you have 1 minute remaining. After 
your time is up, you will hear the gavel.
    [Gavel sounding.)
    This will indicate that you should wrap up, if you have not 
already wrapped up.
    We will begin with Mr. Judson Robinson. You are now 
recognized for 5 minutes for your statement.

 STATEMENT OF JUDSON ROBINSON III, CEO AND CHAIR, HOUSTON AREA 
                          URBAN LEAGUE

    Mr. Robinson. Thank you, Chairman Green, and distinguished 
members of the subcommittee, for allowing me to testify about 
discrimination and other barriers to consumer credit, 
homeownership, and financial inclusion in Texas.
    In addition to my current role as president and CEO of the 
Houston Area Urban League, I have the privilege of serving this 
community as a member of our city council and as vice mayor pro 
tem. I have considerable insight into the barriers that prevent 
Houstonians from sharing in the great prosperity of our City.
    A longer version of my testimony has been submitted to the 
committee, which identifies sources of discrimination and 
barriers and suggests solutions, so I will use my brief time to 
highlight a few issues of particular concern.
    The mission of the Urban League is to enable African 
Americans and other underserved communities to secure economic 
self-reliance, parity, power, and civil rights. We help our 
constituents attain economic self-reliance through 
homeownership, job training, good jobs, entrepreneurship, and 
wealth accumulation.
    Our views and recommendations are based on decades of 
direct program experience in urban communities across the 
country, and our historic role in documenting and fashioning 
remedies to address our nation's long and unfortunate history 
of discrimination against communities of color. The subject of 
today's hearing falls squarely within the mission of our 
organization, both nationally and here in Texas.
    There is a serious lack of access to affordable credit in 
communities of color. The 2008 financial crisis, during which 
Americans lost more than $19 trillion in household wealth, 
impacted minorities disproportionately. Perverse incentives in 
the secondary mortgage market drove unscrupulous brokers and 
loan officers to target otherwise creditworthy borrowers in 
communities of color with abusive and predatory loans.
    The result of targeting minority borrowers with predatory 
mortgage products, in effect, set up these same borrowers to be 
disproportionately affected when the housing market crashed. 
African-American and Latinx borrowers were much more likely to 
receive high-interest subprime loans and loans with features 
that are associated with higher foreclosures.
    The lingering effects on communities of color have been 
devastating. In Texas, low- and middle-income families are 
having particular trouble finding affordable apartments to rent 
or houses for which they can secure a mortgage.
    Houston has among the nation's most extreme income gap 
between renters and homeowners. A typical renter's income of 
$39,500 is 64 percent of a typical homeowner's income of 
$61,470. The City's Black homeownership is about 32 percent, 
far lower than before the 2008 financial crisis.
    As in many cities, African Americans here are more likely 
to lose their homes to foreclosure, and they continue to face 
barriers to accessing credit today. Houston residents are also 
facing the economic hardships brought about by Hurricane 
Harvey, which increased the demand for homes and helped push up 
real estate prices.
    Redlining remains a serious problem. In 1977, Congress 
passed the Community Reinvestment Act (CRA) because of concerns 
that federally insured banking institutions were not making 
enough credit available in the communities they served. 
Disinvestment practices allowed depository institutions to 
accept deposits from African Americans in the inner city and 
reinvest them in more affluent suburban areas.
    Redlining prevented African Americans and others from 
securing affordable homes and mortgages in decent neighborhoods 
and purposely segregated communities. Segregated into slums, 
African Americans were concentrated into poverty by intentional 
discriminatory policies. They were denied credit to purchase 
homes, start small businesses, and to meet everyday living 
expenses. Blight, crime, and decreased property values 
resulted. Cities were left behind with no adequate tax base for 
basic services, accelerating community deterioration.
    To be clear, the CRA is one of the most important civil 
rights and economic justice laws of the 20th Century. In the 
21st Century, however, the law is in dire need of reform. CRA-
regulated institutions have not met the needs of the community, 
allowing an array of non-banks to enter the marketplace, many 
of whom provide high-cost and often predatory products. Simply 
put, the CRA can and must do more.
    Housing segregation reinforces racism and diminishes us as 
a nation. Under pressure from the insurance industry, the 
Department of Housing and Urban Development has proposed 
weakening the regulation of disparate impact claims under the 
Fair Housing Act. If this rule becomes final, victims of 
housing discrimination will have very limited judicial 
remedies. Their access to the courts will be all but gutted.
    I will skip to public housing. The 1.1 million housing 
units operated by public housing nationwide are in need of 
repair and modernization. Funding to address necessary 
maintenance repairs at public housing associations is generally 
under the purview of Congress through the Public Housing 
Capital Fund, which aims to help PHAs maintain their operations 
and address any backlog in capital repairs. However, this 
program is severely underfunded.
    [The prepared statement of Mr. Robinson can be found on 
page 81 of the appendix.]
    Chairman Green. Thank you for your testimony, Mr. Robinson.
    Ms. Everette, you are now recognized for 5 minutes.

 STATEMENT OF BELINDA EVERETTE, DIRECTOR, HOUSING INITIATIVE, 
                      NAACP HOUSTON BRANCH

    Ms. Everette. Thank you for allowing me to serve on this 
panel, and I am very appreciative to serve on the nation's 
largest and oldest civil rights organization, as well.
    A pivotal component to the challenge to increase African-
American homeownership has been, and continues to be, access to 
credit, specifically residential home mortgages. Homeownership 
is the most significant factor contributing to the disparate 
gap in wealth between whites and minorities. A study by 
Brandeis University reveals that years of homeownership, not 
just homeownership, is the driving force at the core of the 
gap.
    Housing, lending, and insurance markets have served as the 
bastions of overt discrimination through residential 
segregation. The dual credit markets in the United States make 
it easy for mainstream lenders to ignore and avoid minority and 
low- to moderate-income communities, but provide easy access 
for payday loan stores, pawn shops, and hard money lenders with 
their specialized products designed to drain the life's blood 
from many communities of color.
    Drive through many of Houston's historic minority 
communities and you will see a plethora of fast-money resources 
with high interest rates and easy payroll deduction repayment 
structures. Most payday lenders enjoy 400 percent interest on 
loan amounts from $50 to $500. This is the level of credit that 
is readily available to Houston's minority population.
    Since 2007, African-American homeownership has experienced 
the most dramatic decline of any racial or ethnic group. 
African-American homeownership declined 5 percent in the past 
10 years, while Caucasian, Asian, and Hispanic homeownership 
declined by only 1 percent. Researching the most recently 
published Home Mortgage Disclosure Act (HMDA) data for the 
Houston-Woodlands-Sugar Land Metropolitan Statistical Area 
(MSA), these numbers are supported by an alarming ongoing trend 
in mortgage origination.
    Of less than 5,000 applications, conventional mortgage 
loans originated in the entire Houston MSA consisted of 2,921 
loans, for a 58-percent approval rate. The Hispanic Americans 
in this great City originated 13,000 applications and had a 54-
percent approval rate for 7,000 loans. That is contrasted by 
52,346 applications for white or Caucasian Americans, with a 
71-percent approval rate for 37,000 loans.
    The statistics reveal a systemic and pervasive 
discriminatory system at work. According to the City of 
Houston, the demographic makeup of the Houston MSA is 25 
percent white, 22 percent Black or African American, 45 percent 
Hispanic American, 7 percent Asian American, and 1 percent 
other or mixed race. Whites are provided homeownership 
opportunities at a rate that is 10 times that of African 
Americans, and 4 times that of Hispanic Americans.
    One of the most important steps in stabilizing and 
expanding sustainable homeownership within minority communities 
is to expand their access to credit. We need to have a greater 
focus on consumer education and housing education related to 
building credit and using low-down-payment and down-payment 
assistance programs. More than 70 percent of all adults are 
unaware that down-payment assistance exists, and that 87 
percent of all homes sold in the United States qualify for 
down-payment assistance.
    While nationally, the African-American homeownership rate 
peaked at 45 percent during the first 6 years of our new 
millennium, it is currently at 42 percent, and Houston is at 
only 38 percent.
    However, in celebration of the 100-year anniversary of the 
NAACP, we developed and introduced a housing initiative, Homes 
for Houston, featuring a Home Buyer Education Program to 
address the rapid decline in minority homeownership. The Home 
Buyer Education Program took a comprehensive approach to 
educating consumers on every aspect of the home acquisition 
process, from learning financial and credit management, to 
understanding sales contracts, appraisals, and title work. The 
curriculum provides common-sense, comprehensive education for 
consumers. Additionally, the seven-module course includes a 
detailed module on down-payment assistance programs.
    In its inaugural year, over 230 people completed the 
program, with 22 new homeowners for $3.8 million in the first 6 
months, and by year's end, we had an additional 50 people in 
the process for $12 million in new mortgages.
    Education and access to resources are the key, but a 
partnership and alliance with the financial services community 
is the driving factor to the success of our program. Meeting 
people where they are and providing true investment in the 
community by investing in its people is the solution to 
increasing and sustaining minority homeownership.
    [The prepared statement of Ms. Everette can be found on 
page 63 of the appendix.]
    Chairman Green. Thank you for your testimony, Ms. Everette.
    Mr. Wong, you are now recognized for 5 minutes.

   STATEMENT OF JOHN WONG, FOUNDING CHAIR, ASIAN REAL ESTATE 
                 ASSOCIATION OF AMERICA (AREAA)

    Mr. Wong. Chairman Green, members of the Oversight and 
Investigations Subcommittee, and members of the audience, I 
thank you all for the opportunity to speak on behalf of the 
Asian Real Estate Association of America (AREAA), and the Asian 
American and Pacific Islander (AAPI) communities whom its 
members serve.
    AREAA represents over 17,000 real estate and mortgage 
professionals from across the country. AREAA is the largest 
AAPI professional association in the United States and is 
comprised of professionals who work directly with AAPI families 
in the real estate and mortgage lending markets. On a daily 
basis, AREAA's members work with clients who experience 
discrimination and barriers in their quest to achieve the 
American Dream of homeownership. It is on their behalf that I 
rise before you to testify.
    HMDA data shows that Asian-American mortgage applicants 
face the highest proportional denial rates due to incomplete 
applications. These incomplete applications result from hurdles 
and barriers faced by AAPI applicants.
    One such barrier is language comfort. AREAA's 2019 State of 
Asia America report declares that the AAPI community is 
linguistically diverse and vibrant: 77 percent of AAPI families 
responded that they speak a language other than, or in addition 
to, English at home; 19 percent said they spoke English well, 
but not very well; 12 percent stated they did not speak English 
well; and 4 percent do not speak English at all.
    To address this reality, AREAA actively advocates for 
inserting an information-gathering language question on the 
Uniform Residential Loan Application, the URLA form. AREAA was 
pleased that the Federal Housing Finance Agency (FHFA) 
originally agreed to the inclusion of this language preference 
question for borrowers. AREAA regrets that the inclusion of 
this question has now been reversed, and we will continue to 
work on language access to strengthen the understanding for 
AAPI communities.
    AREAA is an active member of the Language Access Working 
Group, formed jointly by FHFA, Fannie Mae, and Freddie Mac, to 
improve the ability of mortgage-ready, but limited-English-
proficiency (LEP) borrowers to understand and participate in 
all facets of the mortgage life cycle.
    AREAA fully supports development of an online library with 
standardized definitions of mortgage terms in multiple 
languages. This library would bring consistency to the 
understanding and definitions that consumers, industry 
professionals, and regulators have for the terms used in the 
loan application.
    The library is currently available for Spanish translation 
at the FHFA website. The Asian languages to be included are 
Chinese, Vietnamese, Korean, and Tagalog. Chinese and 
Vietnamese are scheduled to become active on the website this 
year. AREAA urges that this FHFA-Fannie Mae-Freddie Mac plan 
continue.
    The evaluation methodology for creditworthiness is a second 
major hurdle for AAPI borrowers. Many Asian Americans and 
Pacific Islanders, especially foreign-born immigrants, come 
from cultures in which taking on debt is rare or frowned upon. 
The methodology for measuring likeliness to repay a loan does 
not work for borrowers from such cultures.
    The denial rate for mortgage applicants based on 
insufficient credit histories identifies that Asian Americans 
are denied at double the rate of other demographics. HMDA data 
shows that AAPI mortgage applicants disproportionately faced 
the highest denial rates due to unverifiable credit 
information.
    We are pleased that FHFA has announced that Fannie Mae and 
Freddie Mac are adding additional credit-measuring metrics to 
their creditworthiness evaluations.
    The Asian Real Estate Association of America believes in a 
housing market that is free from discrimination for all 
participants. AREAA opposes policies and practices that are 
known to have disparate impact on any demographic group defined 
by race, color, religion, national origin, sex, handicap, 
familial status, sexual orientation, and gender.
    There is a fairness component in AREAA's goals and actions 
to evolve. The Federal Reserve 2018 Survey of Consumer Finances 
reports that families who own their homes have an average net 
worth of $231,400, when compared to the $5,200 average net 
worth of families who rent. This is a 44-percent differential. 
This is validated by the experience of AREAA members and their 
clients' experiences.
    [The prepared statement of Mr. Wong can be found on page 95 
of the appendix.]
    Chairman Green. Thank you very much, Mr. Wong, for your 
testimony.
    We will now recognize Mr. Asante-Muhammad for 5 minutes.

STATEMENT OF DEDRICK ASANTE-MUHAMMAD, CHIEF, RACE, WEALTH, AND 
  COMMUNITY, NATIONAL COMMUNITY REINVESTMENT COALITION (NCRC)

    Mr. Asante-Muhammad. Good morning. And thank you, Chairman 
Green, and members of the subcommittee, for inviting me here as 
a representative of the National Community Reinvestment 
Coalition to speak about entrepreneurship, credit, and racial 
wealth inequality.
    NCRC was formed in 1990 and has grown into an association 
of more than 600 community-based organizations that promote 
access to essential banking services, affordable housing, 
entrepreneurship, job creation, and vibrant communities for 
America's working families.
    In January of 2019, the Institute for Policy Studies 
released a report entitled, ``Dreams Deferred,'' that 
highlights that racial wealth inequality has been increasing 
over the last 33 years.
    In 2016, white median wealth was $146,984, Latino median 
wealth was $6,591, and Black median wealth was at a low $3,557. 
There is growing recognition that wealth is an essential 
indicator of the economic well-being and stability of 
households, and that such low levels of wealth among Blacks and 
Hispanics is a significant indicator of continuing, deep, 
racial economic inequality.
    Professor Ed Wolffs' 2017 paper, ``Deconstructing Household 
Wealth Trends in the United States, 1983 to 2016,'' notes that 
throughout the last 33 years, unincorporated business equity 
has consistently been the second-largest percentage of gross 
assets for households behind only principal residence. Business 
equity is a foundational part of wealth development in this 
country, making small business development a central aspect of 
strengthening financial well-being for many Americans.
    Today, NCRC released a White Paper examining the reality 
and the practices of bank investing in small businesses. NCRC 
and our academic partners--Dr. Jerome Williams at Rutgers, Dr. 
Glenn Christensen at Brigham Young University, and Dr. Sterling 
Bone at Utah State University--conducted a two-part study to 
evaluate differences in small business ownership and lending 
opportunities.
    In one section, NCRC analyzed small business ownership and 
lending at the national and metropolitan level in seven cities 
using data from the Federal Government. The seven areas we 
examined are Atlanta, Houston, Los Angeles, Milwaukee, the five 
boroughs of New York City, Philadelphia, and Washington, D.C.
    Next, NCRC and our partners conducted a series of mystery 
shopping tests of banks to evaluate the customer service 
experience of prospective borrowers of different races and 
ethnicities in the Los Angeles metropolitan area. The title of 
our paper, ``Disinvestment, Discouragement, and Inequity in 
Small Business Lending,'' speaks to much of what we found in 
our research. Our paper highlights that there are tremendous 
gaps in Black and Hispanic business ownership relative to their 
population size. Although 12.6 percent of the U.S. population 
is Black, only 9.5 percent of African Americans are business 
owners, and only 2.1 percent of businesses with employees are 
Black-owned. Hispanics are 16.9 percent of the population but 
only own 5.6 percent of small businesses with employees.
    There is also a lack of access to capital through the 
traditional banking market, especially for Black business 
owners, who have seen a steep decline in Small Business 
Administration (SBA) 7 lending from 8 percent of loans to 3 
percent of loans.
    NCRC's mystery shopping test indicates substandard customer 
service, including inadequate presentation of loan information 
for all testers regardless of race. It is also true that white 
testers received superior customer service by being asked fewer 
questions about eligibility and obtaining more information 
about the loan product than were their Black and Hispanic 
counterparts.
    One of the barriers that NCRC's research team found when 
analyzing the lending data in the small business arena is the 
lack of publicly available data. It is imperative that Section 
1071 of the Dodd-Frank Act be implemented. Section 1071 would 
require lending institutions to submit data on small business 
loans made to minority- and women-owned businesses. The 
nonimplementation of Section 1071 of Dodd-Frank inhibits the 
ability to understand whether capital is allocated in an 
equitable way to women- and minority-owned small businesses.
    Chairman Green has introduced two bills, H.R. 149 (the 
Housing Fairness Act), and H.R. 166 (the Fair Lending for All 
Act), during this congressional session. Both bills would 
strengthen fair housing and fair lending laws by increasing the 
support for testing at both HUD and the Consumer Financial 
Protection Bureau, allowing for more in-depth analysis of 
investment and capital that becomes the basis of financial 
security for so many American households.
    Thank you, Chairman Green, for the opportunity to highlight 
our research in the small business arena.
    [The prepared statement of Mr. Asante-Muhammad can be found 
on page 60 of the appendix.]
    Chairman Green. Thank you.
    At this time, we will hear from Professor Sun for 5 
minutes.

STATEMENT OF HUA SUN, ASSOCIATE PROFESSOR, FINANCE, IOWA STATE 
                           UNIVERSITY

    Mr. Sun. Good morning. I want to thank Chairman Green and 
the subcommittee members for giving me the opportunity to 
testify at this hearing. My name is Hua Sun, and I am an 
associate professor of finance at Iowa State University.
    I am pleased to discuss our findings on potential disparate 
lending practices to same-sex borrowers. I recently published a 
paper--Lei Gao is my co-author--that looks at this issue.
    The primary data we used is a 20-percent random sample from 
HMDA from 1990 to 2015. It gave us over 30 million observations 
on residential mortgage application records that involved both 
a borrower and a co-borrower.
    We then merged this data with Fannie Mae single-family loan 
performance data on over 400,000 mortgages originating after 
2004. And this merged data gave us a chance to look at 
financing costs and succeeding loan performance.
    Our findings show that compared to hetero-sex applicants 
with similar characteristics, same-sex borrowers, on average, 
experienced about a 3- to 8-percent lower approval rate.
    Further, among approved loans, lenders charged, on average, 
a higher interest rate and fees in the range between 2 to 20 
basis points. Our inferred dollar value on the higher financing 
costs imposed on same-sex borrowers is between $8.6 million to 
$86 million nationwide every year amongst same-sex borrowers.
    Yet, we were unable to find statistical evidence that same-
sex borrowers are more risky. Indeed, our data reveals that 
same-sex borrowers appear to be slightly less risky than 
comparable hetero-sex borrowers. They exhibit similar default 
risk, but statistically significant lower prepayment risk than 
comparable hetero-sex borrowers.
    In one other robustness check, we looked at a subsample of 
same-sex borrowers to rule out the possibility that they are 
only relatives. So, basically, we looked at a subsample of 
same-sex borrowers who are of a different race, and we 
continued to find a significantly lower approval rate on this 
restricted sample.
    One serious limitation of HMDA data is its lack of 
information on the borrower's characteristics, such as their 
credit history. To mitigate this problem, we cross-validated 
our study by using a small sample of mortgage borrowers from 
the Boston metropolitan area in 1990.
    The strength of this Boston data is that it has very 
detailed information on borrower characteristics such as their 
credit history, work experiences, and educational backgrounds. 
And the Boston data, after we controlled for a wide range of 
mortgage and borrower characteristics, revealed that same-sex 
borrowers are 73.12 percent more likely to be denied when they 
apply for a loan.
    We also looked at time series performance of loan 
underwriting nationwide, and we found that the gap of the lower 
approval rate to same-sex borrowers is rather persistent. 
Indeed, the HMDA data shows that the gap was even larger in 
2015 than in the year 1990.
    In regard to the agency versus non-agency loans, we found 
that the largest gap seems to be on conventional loans, where 
the raw approval rate on same-sex borrowers is about 7 percent 
lower. The gap is about 4 percent for VA loans and 0.8 percent 
for FHA loans.
    To summarize, our findings document some statistically- and 
economically significant findings on adverse lending outcomes 
to same-sex borrowers. The disparate lending practice seems to 
be throughout the life cycle, from applying for, to paying off 
a loan.
    Given the fact that current credit protection laws, such as 
the Fair Housing Act and the Equal Credit Opportunity Act, do 
not explicitly list sexual orientation as a protected class, it 
is my wish that our study and this testimony will help initiate 
a constructive discussion on the need and the means to provide 
better protection to same-sex borrowers.
    Thank you very much.
    [The prepared statement of Mr. Sun can be found on page 92 
of the appendix.]
    Chairman Green. Thank you, Professor.
    At this time, the Chair will recognize the gentlelady from 
Texas, Ms. Garcia, who is a memberof the subcommittee, for 5 
minutes for questions.
    Ms. Garcia of Texas. Thank you, Mr. Chairman, and I would 
like to start off today by thanking you for convening this very 
important hearing. I know we have looked at this topic some in 
the broader sense on the committee, and certainly you have 
filed some legislation that might address some of these issues. 
But it is always so great when we can go in the field and hear 
directly from the folks at home.
    The Houston region is one of the most diverse metropolitan 
areas in the country. Our diversity is one of our strengths, 
and it is one that should make us all very proud.
    At the same time, we need to wrestle with some hard truths 
locally and as a nation. The legacy of discrimination and 
racism has kept some communities and some of us here today from 
succeeding.
    I have here a redline map of Houston from 1930. Sadly, if 
we look at it even today, we can certainly see that some of 
these lines still mirror some of what is happening today.
    I know that in my district, the yellow is noted as being a 
definitely declining area, an area that we need to stay away 
from. Hazardous in red includes, sadly, part of your district 
and part of mine. And if we look at some of the numbers that 
some of you all have mentioned today, certainly we may not have 
made much progress when you look at it in that respect.
    So, today, the most--
    Chairman Green. Would the gentlelady like to introduce 
these documents into the record?
    Ms. Garcia of Texas. I ask for unanimous consent to enter 
this in the record.
    Chairman Green. Without objection, it is so ordered.
    Ms. Garcia of Texas. Thank you.
    Today, the most blatant and obvious discrimination in 
redlining mostly doesn't occur, but it continues under the 
guise of gentrification, where changes are made to a community 
that do not help those who live there and, instead, pressure 
them out of their homes.
    This committee saw that in Detroit, where Congresswoman 
Tlaib hosted us earlier in August, and I can only guess that it 
is repeated all across America.
    I also believe, and this committee is looking at this very 
issue, that we need to make sure that discrimination impacts do 
not get incorporated into new ways of banking and other 
financial institutions as they use new technology such as 
artificial intelligence or algorithms to make lending 
decisions.
    We know discrimination exists. It is sometimes just more 
subtle and maybe a little more quiet. But we know it is there, 
and Mr. Chairman, thank you for bringing us together so that we 
can end it.
    I wanted to start my questions with Mr. Wong. Mr. Wong, you 
mentioned language barriers. Many have talked about economic 
issues. Some have talked about financial stability.
    If you had to name the one factor that we can look at to 
try to address this, what would that be, that would widen the 
doors of opportunity for all minorities with respect to the 
issue that we are talking about today?
    Mr. Wong. I think AREAA's perspective is that the language 
barriers that are faced by individuals not only impact their 
ability to obtain a loan, but it affects their ability to 
maintain the loan sustainably, and even at the very end, should 
something horrible happen, to not understand what resources are 
available to help them if they come into problems.
    During the foreclosure crisis, a number of AREAA members 
were involved in the AREAA disposition process. And many noted 
that homes that had foreclosed owners of Asian surnames, when 
they did their initial inspection of the property, they were 
spotless. These individuals had cleaned the floors, mopped 
everything, and just left. And in discussions with the agencies 
and other banks, these individuals had never, ever called the 
lenders to note that there might be an issue.
    So I think that, generally speaking, to have something like 
the language library that is in the process of being 
implemented--it has been successful with the Spanish language--
if that is continued, rather than deterred in another 
direction, I think that would be very helpful.
    Ms. Garcia of Texas. All right, thank you.
    And Mr. Robinson, you know I had to pick on you. It is good 
to see you here.
    Tell me, when we talk about funding, are we seeing 
disparity in funding for some of the public housing projects 
and some of the projects that I know that the Urban League is 
working on? Can we say that other groups--you know, white 
groups, if you will--get more dollars in funding and less cuts 
than, perhaps, the Urban League and some that address minority 
housing opportunities?
    Mr. Robinson. Let me speak first from the national 
perspective.
    The most recent study by HUD on the public housing capital 
backlog was published in 2010 and found that the nationwide 
backlog of deferred maintenance to address needed repairs and 
improve the living conditions in public housing stood at $26 
billion and would grow at a rate of 8 percent, or $3.4 billion, 
annually, if not addressed.
    According to the same study, 10,000 public housing units 
are lost each year due to disrepair. The key drivers of the 
capital backlog in this report were needed household 
improvements that ensure human health and safety.
    To speak locally about the access to resources to ensure 
that we have adequate public housing, I would say it is pretty 
general across-the-board. These numbers would impact Texas just 
as disproportionately as they do any other State as it relates 
to minorities.
    Being strong advocates for the population of underserved is 
our challenge. Making sure that we have the resources necessary 
to ensure that our voices are being heard is an ongoing 
challenge. It always has been. But looking at the national 
perspective of the overall impact, it is pretty daunting.
    Ms. Garcia of Texas. All right, thank you.
    Thank you, Mr. Chairman. I yield back.
    Chairman Green. The gentlelady yields back.
    We will now recognize the gentleman from New York, Mr. 
Meeks, who is also the Chair of our Subcommittee on Consumer 
Protection and Financial Institutions.
    And I might add that we all serve under the leadership of 
the Honorable Maxine Waters, who is the Chair of the full 
Financial Services Committee.
    Mr. Meeks, you are recognized for 5 minutes.
    Mr. Meeks. Thank you, Chairman Green. And I want to thank 
you for your extraordinary leadership in Washington, D.C., and 
the methods by which you handle the Oversight and 
Investigations Subcommittee as its Chair, and your strong 
advocacy in making sure that the people of the 9th 
Congressional District are receiving the kind of attention they 
should on the Financial Services Committee, as well as 
throughout the Congress of the United States, as to 
accessibility to financial institutions, and your continuing to 
look into the root causes of the kind of disparities that we 
have heard from our panelists today, and digging into it and 
not allowing just courtesy answers by some of the institutions, 
digging deep into the reasons and how we can stop the kind of 
discrimination that I have heard here, the redlining that still 
continues.
    Your pursuit of justice and equality in creating wealth in 
communities of color is unparalleled. And thank you also for 
bringing us down to your district and to Texas so that we can 
continue to have this very, very important dialogue and 
conversation.
    As you indicated, I am from New York, which is probably 
home to more of the huge financial institutions than any place 
in the world. And they have a great deal of wealth. Yet, we are 
seeing the disparities between the haves and the have-nots in 
this country like never before.
    The one aspect, the one way that we saw, particularly in 
African-American and Hispanic and Asian communities, that you 
could start closing that wealth gap was two ways: one, 
homeownership, which after 2008 was devastated; and two, as Mr. 
Asante-Muhammad has said, ownership of your business, equity 
ownership. And both of those things, we have recently begun to 
lose.
    We see our role on the Financial Services Committee to 
restore the focus on the roles of our regulators to make sure 
that discrimination is stopped; and on the role, particularly 
of small and minority banks, that they can play in the 
communities in which which our people live.
    Indeed, when I think about 2008 in my district--I am sure 
it is no different than Houston--we suffered the greatest 
amount of homeownership loss of anybody in New York City.
    Yet, the cause of the problem was not the small and 
minority banks. They were not the ones that were giving out the 
exotic mortgages. They were not the ones that were giving out 
the no-document loans. They were not the ones that were giving 
out the adjustable-rate mortgages that they knew people could 
not pay for after 2 or 3 years.
    So, we are focused now on trying to make sure that we 
remedy those scenarios. We are coming up--Mr. Robinson, as you 
indicated, we are looking at now, how do we bring a revised and 
new and energized CRA so that we can begin to level the playing 
field?
    So I will ask you the first question, Mr. Robinson, because 
we are talking to the OCC and the FDIC and the Federal Reserve 
about CRA. And given technology today and how people evolve, 
what do you see? What would you suggest that we look at and 
focus on, on our committee, to make sure that they are an 
integral part of correcting and moving forward with CRA?
    Mr. Robinson. Well, a couple of the stats that I think 
someone on the panel mentioned were pretty eye-opening in that 
the banks had--I think it was actually our Congressman Green 
who mentioned that there was a profit of $780 billion in the 
banking industry of just the top-tier banks and $160 billion in 
losses, and that is a way of just doing business, that they 
have a $620 billion gain and will take that.
    One of the things that we have seen that has helped us to 
prepare future homeowners to be better prepared for addressing 
their mortgages and their responsibilities is the fines 
associated on these banks that have harmed communities of 
color, and others, to ensure that those dollars come back to 
agencies like the Urban League and the NAACP, so that we have 
foreclosure-prevention programs, so that we have first-time 
homebuyer programs, so that we have financial literacy 
programs.
    I think that there needs to be an increase in those types 
of fines and assessments, to ensure that banks are pushing 
those dollars back into these organizations that can help 
address language barriers and all of the other things that we 
have talked about today because the money, I think, is there. 
And we need to, in turn, try to make sure that the money comes 
back to the communities that have been impacted by those who 
have taken advantage of those very same communities.
    Mr. Meeks. Thank you.
    Chairman Green. The gentleman yields back.
    At this time, a brief announcement: This hearing is part 
one of a two-part process. We will convene again in New York in 
the 5th Congressional District, which is Mr. Meeks' district, 
for a continuation of this process because we are trying to 
develop legislation, and we believe that Mr. Meeks will provide 
us with the additional intelligence necessary to have 
efficacious legislation developed.
    With that said, we will now hear from the gentleman from 
Missouri, Mr. Cleaver, who is also the Chair of our 
Subcommittee on National Security, International Development 
and Monetary Policy, for 5 minutes.
    Mr. Cleaver. Thank you, Mr. Chairman.
    Mr. Asante-Muhammad and Dr. Wong, it is counterintuitive, 
but when you look at the stock market exploding and growth and, 
at the same time, look at or listen to all of the proclamations 
about how great the economy of the United States is going, but 
when you look at the low-income Americans, their lives are not 
being impacted. I think only about half of the country is 
involved in the stock markets, anyway.
    And so the government, from my perspective, needs to do 
something, and I would like to find out what you think we can 
do. I know CRA has been something that we have all talked 
about. And as odd as it may seem, in the 1930s Congress 
actually created an agency to discourage banks from providing 
loans in what they considered to be hazardous neighborhoods, 
the antithesis of the CRA.
    But with the CRA, something has to be done, I think, and I 
am interested in your response. Because a bank, for example, 
can invest in a CRA area and still not help poor folks because 
they can make investments in or provide loans to people in that 
area who could get a loan anywhere in town. And so, providing a 
loan to him or her is not helping, and they can then still 
claim CRA credit.
    What do you think we can do? Yes, please?
    Mr. Wong. Thank you.
    I think the intention of the Community Reinvestment Act is 
to support those communities that are underserved, and is an 
appropriate origination of the concept. And in recognition of 
the need to revise and revitalize it today, one of the causes 
for that, from my understanding, is because there are now 
artificial intelligence metrics and stuff that can be used in 
some ways to disguise the penetration and use of such products.
    My personal perspective--and this is not an AREAA 
perspective, but I am from the San Francisco Bay area and I am 
familiar with many of the technology firms that are in Silicon 
Valley down the road--AREAA also works closely with 
institutions and academics from across Asia on its real estate 
work, but also look at those. And I think that the important 
thing is that because the data is available, we can actually 
identify true impact, both in the communities it reached, the 
individuals it reached, and also to determine their 
performance.
    Right now, when you look at individuals who use payment 
that is online or use these apps, you have a deeper sense of 
how they are living their lives as it relates to use of credit.
    And so that if CRA, as it moves forward, manages to take in 
not just the large traditional financial institutions, but 
broader ways that people are accessing credit, but also 
requires, in fact, the data that comes from there, so that we 
can see in a very rapid--you do not have to wait 5 years to get 
data to see how it is going--then, in fact, as to allow the 
regulators to make adjustments that are based on data, rather 
than just on positioning innuendo.
    So, that is a personal perspective. And I sense that--and 
you mentioned you have some international oversight--regardless 
of what one believes of activities in other countries--and it 
is clear from my American perspective that the privacy laws in 
China are not what we are comfortable with here--the data and 
the methodology is being developed to understand more 
personally how products are penetrating into the market and 
what the response is.
    So I think that is a way to, in fact, eventually become 
demographic-blind to see how things really work, but then you 
can better help those who are underserved.
    Mr. Cleaver. Thank you. Mr. Asante-Muhammad?
    Mr. Asante-Muhammad. Yes. One thing I would note is, again, 
we do think it is very important that HUD firmly enforce the 
disparate impact rule, and I think things like the disparate 
impact rule is essential to make sure the CRA lives up to its 
promise.
    I think we also have to have much more fine-tuned 
measurements of what we are trying to achieve. Even in the 
negotiation of CRA, there was a limited focus on income, a 
limited focus on not getting racial data. I think a racial 
wealth divide analysis is essential because, as you noted, 
investing in a low-income area, but making most of that 
investment with high-income businesses, is very limiting in the 
impact, in the development that is occurring.
    So you must have a much more clear racial wealth divide 
analysis of who are these funds going to, and making sure that 
there is a positive impact on the community as a whole, because 
we are seeing, in the last 30 years, a regression of 
investments, but the lower-income, even medium-income 
communities aren't benefitting. And actually, I think, even for 
African Americans and Latinos, even high-income African 
Americans and Latinos who are very low wealth are not seeing 
the benefits that other communities are seeing.
    Mr. Cleaver. Thank you, Mr. Chairman.
    Chairman Green. The gentleman's time has expired.
    At this time, the Chair recognizes himself for 5 minutes.
    Ms. Everette and Mr. Robinson, quickly, if you would, give 
us some intelligence on this question related to small 
businesses not getting loans in certain areas?
    In Houston, the intelligence that I have been afforded 
indicates that small business loans mostly go to upper-income 
areas at a rate of about 49 percent, with just 5 percent going 
to low-income areas, 19 percent to moderate-income areas, and 
27 percent to middle-income areas.
    Now for edification purposes, all of these persons who ask 
for small business loans have to qualify to the same extent. So 
the question becomes, why is it that they can go in certain 
areas, but not in other areas?
    I will start with you, Ms. Everette, and then Mr. Robinson. 
And if you can be as terse as possible, I have another 
question.
    Ms. Everette. Thank you, Congressman Green.
    One of the key indicators or, I should say, qualifiers for 
a small business is a consideration of the applicant's assets, 
and this goes back to the homeownership and how important it 
is. When you apply for a small business loan, they are looking 
at your overall assets, and if you have none, if you don't own 
a home, you don't have the collateral.
    So I think when you try to look at or understand the lack 
of availability for small business owners in certain census 
tracks, unless the financial institution is incented by some 
program or some guarantee, they are less inclined to take, I 
guess, a chance on an unsecured loan or an unsecured business 
loan.
    The other thing that I also find when they talk about CRA, 
when we were vetting financial institutions for the housing 
initiative, I was, quite frankly, very surprised to learn how 
many institutions actually meet their CRA requirement through 
the secondary market. So they will buy pools of loans to 
artificially inflate their CRA numbers, which will give the 
impression that they are reaching into certain census tracks 
and certain communities. But it is not through organic 
origination; it is through secondary marketing.
    Chairman Green. Mr. Robinson, would you comment quickly, 
please?
    Mr. Robinson. I would have to agree that having a strong 
financial history of wealth in our community has created huge 
issues that have cast generations of challenge for minorities 
and underserved populations. Lack of inheritance, lack of 
strong credit, lack of just the resources necessary within your 
own local family band, in addition to all of the traditional 
resources that people typically see as avenues for opportunity, 
is lacking in our community, and that will only be built 
through opportunities that you all can help to generate 
successful avenues towards changing that direction.
    The other thing that we typically see, especially on the 
entrepreneurship side, is access to angel funds. Access to 
capital is a huge challenge in our communities. Now, be that a 
racial matter, I think that there is some legacy of traditional 
comfort levels with certain populations that does not extend to 
the people with whom we try to do business.
    Chairman Green. Thank you.
    I would like to go to Mr. Asante-Muhammad. Mr. Asante-
Muhammad, pairing and testing, first, explain the process, and 
then explain, if you would, how can these two pieces of 
legislation, H.R. 149, the Housing Fairness Act, and H.R. 166, 
the Fair Lending for All Act, benefit from this testing, and 
how can these two bills benefit the public?
    Mr. Asante-Muhammad. Yes, sir. So the two-pair testing, 
what we do is we choose an area, and then we choose a certain 
amount of banks in that area, and we send, depending on what we 
are testing on, gender or race--we send in maybe a B lack man 
and a white man, or maybe a Latino woman and a white woman--and 
then we usually give a slightly stronger profile.
    Most recently, we were doing small business lending, where 
there is very little information actually on small business 
lending. But we give a slightly stronger profile to the 
minorities. We send them both in to see how they are treated 
and what the process is. And we can do that through different 
ways of audiotaping, sometimes videotaping. We have been doing 
that in the different cities across the country.
    And what is clear is--and I think all of the data that 
everybody has been showing--is that there has been an ongoing 
negative impact, inequality in lending, whether it is related 
to homeownership, whether it is related to entrepreneurship. 
And so we are looking--we are exploring, what are the practices 
in banks themselves that might be supporting that result?
    And we feel that these two pieces of legislation, H.R. 149 
and H.R. 166, and their ability to strengthen fair housing and 
fair lending laws, and increase support for testing at HUD and 
the CFPB, are essential to having a better understanding of the 
inequality and the way people are being treated.
    And actually, I just want to highlight one of the important 
things that we noted in our study is that all people, 
regardless of race, were not receiving good treatment, not 
receiving treatment we think is appropriate for small business 
lending. So, I think there is an overall crisis in investing 
and in developing true small business, and it just 
disproportionately falls on people of color, particularly 
Blacks and Latinos.
    Chairman Green. My time has expired.
    Without objection, I would like to introduce three letters 
into the record: the first is from Harris County; the second is 
from the City of Houston; and the third is from the U.S. 
Department of Housing and Urban Development.
    All three relate to the replacement of homes after they 
have been damaged due to some natural disaster, and there seems 
to be a dispute about how these homes should be replaced.
    Without objection, I am going to ask Ms. Everette if you 
can just quickly tell us why these letters are important in the 
record.
    Ms. Everette. Thank you, again.
    The City of Houston has, of course, received a substantial 
amount of money to assist Harvey victims, and that money is 
being administered by the Texas General Land Office (GLO). The 
General Land Office has a requirement that, regardless of house 
size--how many bedrooms or square footage--that they will only 
replace a two-bedroom home.
    They also have restrictions that are basically cost-
prohibitive for senior citizens or many people in that they 
require environmental studies. Then, the environmental study 
has to be submitted. You have to get an appraisal. And then, 
all of that has to be submitted.
    Then, you have to get your contractor approved. The GLO has 
to approve the contractor. Then they have to approve the 
contractor's bid. And it is not just going directly from the 
consumer to GLO. It has to go through the City. That is an 
approval process.
    But the biggest issue is that the City has reached out to 
not only GLO, but to HUD, to try to get an exception to this 
two-bedroom guideline that they have. And basically, everyone 
is pointing their finger, saying, well, I don't have the 
ability to do this, or it is within the State's guideline to 
have this restriction of two bedrooms.
    So what I find astonishing is that there is no square 
footage guideline, but there is a--if you have a four-bedroom 
home, the maximum repair will be to two bedrooms. So, your 
four-bedroom home will now be replaced with a two-bedroom home.
    Chairman Green. Does any panel member wish to ask a 
question concerning this?
    Ms. Garcia of Texas. I just want to be clear, you are 
saying that the rule says that if the house has more than two 
bedrooms, they won't get coverage?
    Ms. Everette. They are saying if it has more than two 
bedrooms, they will not repair the home or replace it.
    Ms. Garcia of Texas. Regardless of the square footage of 
the two bedrooms?
    Ms. Everette. Regardless. There is no square footage 
guideline at all. It is just simply two bedrooms.
    Ms. Garcia of Texas. That surely doesn't make common sense, 
does it?
    Ms. Everette. No, it doesn't.
    Ms. Garcia of Texas. No wonder people say we do things that 
don't make sense. All right.
    Chairman Green. Does any other Member wish to be recognized 
on the issue?
    [No response.]
    If not, thank you very much to all of the members of this 
panel. You may now be excused, or you may stay and watch the 
rest of the hearing.
    At this time, friends, we have concluded, but we will go 
forward with the next panel. We are scheduled to take a break, 
but because we have some flight issues and various other things 
that would be infringed upon if we prolong this, we will go 
right into our next panel.
    So if you will give us just a moment, we will move this 
panel away, and the members of the next panel will come 
forward. I am going to ask the persons who are assisting us 
with the name plates to do so quickly and bring out the new 
name plates, and we will move forward.
    And if you can, friends, please stay. This is going to be 
an exciting panel. It will deal with banking, credit unions, 
and lending, some of the things that are important to you in 
terms of acquiring and accessing capital, credit, the things 
that can allow for homeownership, as well as small business 
development.
    [brief recess]
    Chairman Green. The Oversight and Investigations 
Subcommittee will again come to order.
    This session is a continuation of the subcommittee's 
hearing begun this morning on, ``Examining Discrimination and 
Other Barriers to Consumer Credit, Homeownership, and Financial 
Inclusion in Texas.''
    Without objection, members of the local media who are 
invited to this hearing may engage in audio and visual coverage 
of the subcommittee's proceedings. Such coverage is solely to 
educate, enlighten, and inform the general public on an 
accurate and impartial basis of the subcommittee's operations 
and consideration of legislative issues, as well as developing 
an understanding and perspective on the U.S. House of 
Representatives and its role in our government. This coverage 
may not, N-O-T, be used for any partisan political campaign 
purpose or be made available for such purpose.
    I will now present a brief statement, after which we will 
hear from witnesses that I will introduce.
    From this morning's panel, we heard compelling testimony 
about the depth and breadth of discrimination that regularly 
occurs against minority borrowers here in Houston and around 
the country.
    We turn now to our second panel, which will speak to the 
experience of minority-owned banks and community development 
financial institutions that are working to be part of the 
solution to the discrimination that exists in the lending 
marketplace.
    These institutions do vital work in underserved communities 
and make loans that other banks will not, according to a recent 
FDIC study. That is why it is important that we do all that we 
can at the Federal level to strengthen and boost minority-owned 
banks. The testimony of our next panel will help us to better 
understand how Federal laws and policies can do just that.
    I would like to extend a warm welcome to each of the 
witnesses on the second panel. I am pleased to introduce you 
now. The first witness will be Noel Andres Poyo, executive 
director, National Association of Latino Community Asset 
Builders. The second witness will be Jeff Smith, president and 
CEO of Unity National Bank. The third witness will be Celina 
Pena, chief advancement officer, LiftFund. The fourth witness 
will be Gary Lindner, president and CEO of PeopleFund. And the 
final witness will be George Johnson, CEO, George E. Johnson 
Development.
    I am also honored to recognize that our colleague from 
Michigan has joined us. She is the honorable colleague whom we 
visited in Michigan not so very long ago, when we had a field 
hearing there. The gentlelady from Michigan, Ms. Tlaib, is with 
us, and will be a part of the panel as well.
    With that said, let us now proceed with our first witness. 
Mr. Poyo, you are now recognized for 5 minutes for your 
statement.
    I will, if I may, just remind witnesses that at the end of 
4 minutes, you will hear this bell.
    [Timer sounding.]
    This will indicate that you have 1 minute left.
    And then, at the end of that 1 minute, you will hear this 
sound from the gavel, indicating that your time has expired.
    [Gavel sounding.]
    Mr. Poyo, you are now recognized for 5 minutes for your 
statement.

  STATEMENT OF NOEL ANDRES POYO, EXECUTIVE DIRECTOR, NATIONAL 
    ASSOCIATION FOR LATINO COMMUNITY ASSET BUILDERS (NALCAB)

    Mr. Poyo. Thank you for this opportunity to speak with you.
    My name is Noel Andres Poyo. I am the executive director of 
NALCAB, the National Association for Latino Community Asset 
Builders.
    NALCAB is a national nonprofit organization, based in San 
Antonio, Texas. We have offices in Washington, D.C., and we are 
the hub of a network of more than 120 mission-driven 
organizations in 40 States and D.C., that build affordable 
housing, address gentrification, support small business growth, 
and provide financial counseling.
    I want to thank you for bringing the business of Congress 
to the people here through a field hearing. It shows particular 
respect, especially for people who don't have the resources to 
go and see your work in Congress, and I am deeply appreciative 
of it.
    Earlier, you heard testimony on barriers to credit, 
affordable housing, and banking services, and I hope that my 
testimony helps to advance the discussion of solutions.
    It is important to recognize that the future strength and 
competitiveness of the U.S. economy relies on achieving far 
broader financial inclusion. To illustrate the point, consider 
that Hispanics have fewer assets, lower income, and strikingly 
less access to credit and capital than non-Hispanic white 
populations. And yet, Hispanics are driving demographic growth 
in this State and in this country.
    So, this is a pressing macroeconomic concern that a 
population that is driving our growth really has these gaps 
economically, right?
    And this is the same reality for African Americans, and 
significant segments of the Asian Pacific American population. 
For many rural communities, there is the same gap. This is not 
a Latino thing. This is not a rural white thing. This is not an 
African-American thing. This is a future of the U.S. economy 
thing.
    And I will say it again, the future strength and 
competitiveness of the United States of America relies on us 
achieving far broader financial inclusion. And we are all in 
this together. The good thing is that our communities, our 
diverse communities are a good investment.
    Advancing financial inclusion requires two equally 
important things: fair access to capital and credit; and the 
capacity to use that capital and credit to build assets.
    Some people in our economy have the good fortune of having 
relatively easy access to fair capital and credit. Those people 
buy homes and start businesses and build assets, and that is 
good for our economy.
    Imagine how much better it would be for our economy if 
everyone shared in that privilege? It should be a highest 
priority of our domestic economic policy to open fair access to 
capital and credit for people who do not already have the 
privilege of that access.
    One size does not fit all when it comes to effective 
solutions for expanding financial inclusion, and we need local 
and culturally relevant solutions. So, I want to focus 
particularly on the role of community development financial 
institutions (CDFIs) and minority depository institutions 
(MDIs).
    CDFIs are certified by the Treasury Department. They are 
private financial institutions that deliver responsible, 
affordable financing to underserved communities. They include 
nonprofit loan funds, community development credit unions, some 
banks, and some venture capital organizations.
    And minority depository institutions are banks that are 
controlled by Black Americans, Asian Americans, Hispanic 
Americans, and Native Americans. The FDIC recognizes 
approximately 150 MDIs. Some of those are also certified as 
CDFIs.
    CDFIs and MDIs have a proven and prudent track record of 
investing in low- and moderate-income and minority communities 
and businesses, including through difficult economic times. 
CDFIs and MDIs make up a critical part of the ladder of 
economic inclusion in our country and provide realistic and 
responsible financing opportunities in our communities.
    One of the requirements of certifying a CDFI is that they 
represent communities, so MDIs and CDFIs are a dramatic 
demonstration that representation in the boardroom matters. 
Imagine how far we could advance financial inclusion if the 
boardrooms of the Federal Reserve Banks of America or of our 
largest banks reflected our communities, as do CDFIs and MDIs?
    I will also say that these are a very important validation 
of the Federal investments and efforts that have been made to 
strengthen CDFIs and MDIs, including investment in the CDFI-
funded treasury and the efforts of the FDIC and other agencies 
to strengthen MDI banking partnerships.
    While local and culturally relevant efforts through CDFIs 
and MDIs are critical solutions, it would be a mistake to lose 
focus on the larger macroeconomic and policy matters that 
profoundly shape opportunities for everyone in this country, 
but especially low- and moderate-income (LMI) populations, 
rural communities, minorities, and immigrants, on issues 
including monetary policy, trade and immigration policy, a 
strong and independent CFPB, GSE reform, and the Community 
Reinvestment Act.
    I just want to say a word about monetary policy, in 
particular. We often think of monetary policy as set by the 
Federal Reserve in the context of the stock market or 
international finance, when, in fact, it is as consequential 
for low- and moderate-income people as it is for anybody in 
this country, and sometimes more so.
    We need to be cognizant of the fact that rising rates can 
impact the ability of LMI workers to find employment. 
Similarly, we need to be worried that when the rates are too 
low, we may incentivize risk-taking that creates bubbles, such 
that when those bubbles pop, it is low-income people and people 
of color who most often are hurt first and worst.
    We need more focus and research to understand the 
consequence of monetary policy for low-income people and for 
minorities in this country. And I will say that former Chair 
Yellen and Chairman Powell have made important strides in this 
regard. In a recent speech in Jackson Hole at the Economic 
Policy Symposium, Chairman Powell pointed to the disaggregated 
employment rate and the wage growth among LMI communities as a 
key sign of breadth and depth of strength in the economy. We 
need our Federal Reserve looking at these disaggregated issues 
in LMI and minority communities.
    I also will just say a word on the Community Reinvestment 
Act, which is critical infrastructure for capital flow to low- 
and moderate-income people in this country.
    I want to encourage the Members to strongly exercise their 
oversight role, particularly with regard to the OCC's efforts 
to modernize the CRA. We need CRA modernization that keeps the 
needs of low- and moderate-income people front and center. The 
go-it-alone approach that we have seen from the OCC, without 
the concurrence of the Federal Reserve or the FDIC, is of deep 
concern. And if something is passed, it will ultimately 
undermine the CRA because we will see inconsistent use of the 
CRA across different regulatory agencies, which then will drive 
the banking industry towards greater concern about the CRA.
    Finally, just a word on the strong and independent Consumer 
Financial Protection Bureau (CFPB). A truly free and efficient 
market has clear rules of the road to prevent abuse. The CFPB 
plays a central role in placing reasonable limits on predatory 
activity that strips wealth from LMI communities, including 
such practices as payday lending, auto title lending, and 
abusive collections practices.
    We should all be concerned by the actions taken by the 
current Administration to eliminate prudent financial 
safeguards on our consumer financial markets. On these issues, 
I now collaborate very closely with the Center for Responsible 
Lending, where I also serve as a board member.
    Thank you for the opportunity to present my testimony.
    [The prepared statement of Mr. Poyo can be found on page 77 
of the appendix.]
    Chairman Green. The Chair thanks you, Mr. Poyo, for your 
testimony.
    And Mr. Smith, you are recognized for 5 minutes.

STATEMENT OF JEFF SMITH, PRESIDENT AND CEO, UNITY NATIONAL BANK

    Mr. Smith. Chairman Green, Chairman Cleaver, Chairman 
Meeks, and members of the committee, good afternoon, and thank 
you for the opportunity to speak on behalf of the minority 
depository institutions (MDIs) like 56-year-old Unity National 
Bank. Unity is the only African American-owned bank in Texas.
    First, I would like to say that the number of MDIs has been 
declining for so long that data strongly suggests if this trend 
is not reversed, there will be no more African American-owned 
banks in the country.
    CRA plays an important part in this. In my opinion, the 
time to act is now. You see, MDIs do not have the same access 
to capital that other big banks have. The issues are complex, 
and the suggestion that MDI banks have been poorly run is 
false. Rather, it is because of the high cost associated with 
providing the banking services and products to the low- to-
moderate-income areas and the unbanked.
    To illustrate my point, Unity National Bank is a $104 
million bank with over 11,000 customers. My previous bank, 
Houston Community Bank, was a $310 million bank with 6 
branches, twice the number of branches that Unity has, and 3 
times larger than Unity. But Houston Community Bank only had 
5,400 customers. This was a bank that was making $4.9 million a 
year in profit.
    Even a billion-dollar bank in Houston, Texas, today is 
likely to have 10,000 customers or less. Unity's operational 
costs are many times greater, and thus, across banking lines, 
whether you are talking about IT costs, customer service, 
operational, or administrative costs, are 3 to 5 times that of 
banks that are 10 times larger than Unity.
    CRA has a role to play here. The flexibility of CRA can be 
its strength, but also its main weakness. Larger banks want to 
comply with CRA because they have to, but they want to do it as 
minimally as possible. They are charged to be profitable to 
their shareholders. So as a result, we end up with low-hanging 
fruit.
    In my entire 40-plus years, I have been president, or 
president and CEO for the past 20 years at the State and 
national level. I know what goes on with the CRA regulations in 
the boardrooms and in the executive suite. I know how to 
navigate the regulations, and I see my brethren doing it today.
    The low-hanging fruit opportunities will always be the ones 
picked, whether that includes a $249,000 deposit, which is a 
liability to the MDI, or a legal-limit participation loan with 
a prime rate, or mentoring. These are all easy for the big 
banks. They have little expense associated with them. And what 
I think we need to do is to incentivize the big banks to do 
more and to consider other ways to utilize the CRA.
    More meaningful examples of how to help the MDIs would 
include specific CRA credits to a big bank by purchasing the 
preferred stock of the MDI. This additional capital could be 
used to grow the asset size of the MDI, expand products and 
services, and assist in specific programs designed by the MDI 
to help its customers break away from high-interest payday 
loans, non-bank small business loans, and check-cashing fees. 
The big banks would carry the MDI-preferred shares as an asset 
on their balance sheet, and it is even possible that the 
preferred shares would pay a dividend.
    Let me close by saying MDIs are not looking for a handout, 
but rather, a hand-up. It is the MDIs who are the ones that are 
banking the LMIs, while taking on the brunt of all of the cost.
    But this is not a one-way street. This type of meaningful 
collaboration and partnership between the banks could result in 
a valueship proposition for both banks. MDIs can assist bigger 
banks in growing and understanding the robust market that the 
LMIs could offer.
    Thank you for your time, and I look forward to answering 
any questions you may have.
    [The prepared statement of Mr. Smith can be found on page 
86 of the appendix.]
    Chairman Green. The gentleman's time has expired. Thank 
you, Mr. Smith, for your testimony.
    Ms. Pena, you are now recognized for 5 minutes.

 STATEMENT OF CELINA PENA, CHIEF ADVANCEMENT OFFICER, LIFTFUND

    Ms. Pena. Thank you, Chairman Green, and thank you to the 
subcommittee for hosting us today.
    Good morning. My name is Celina Pena. I am the chief 
advancement officer at LiftFund, a Texas-based community 
development financial institution serving 14 States in the 
South Central United States.
    Since 1994, our mission has been to level the financial 
playing field for entrepreneurs. During our 25 years, we have 
provided over $300 million in capital to over 20,000 
entrepreneurs. In the greater Houston region, we have provided 
$54 million to 3,000 small business owners.
    Our direct business loans range from $500 to $500,000. We 
are also a partner with SBA on all of their small business 
lending products, including the SBA 504, the SBA 7(a), 
Community Advantage, and the SBA Microloan program.
    We also partner with institutions to provide a pathway to 
financial inclusion. I am taking some liberty to share some 
examples as it relates to our organization and partnerships.
    Our first relationship is with Woodforest National Bank, 
headquartered here in the Woodlands. They actually purchase the 
fund-generated loans. They have purchased a total of $9 million 
in loans over the past 2 years, with an average of $13,000 a 
loan. LiftFund provides the loan to the client, Woodforest 
purchases the loans, as it demonstrates the criteria of service 
and impact per CRA, and LiftFund also continues to service the 
loan. We believe this is a win-win, as it relates to serving, 
obviously, the populations that we think are deserving.
    We also partner with CNote. It is a California-based B 
corporation, and it is a unique online investment platform that 
focuses on social impact investing. LiftFund currently has $4.7 
million in investment that started this year dedicated to 
serving minorities and women-of-color entrepreneurs. CNote is a 
woman-owned firm, and it is creating a space where investments 
can be made that create inclusivity with capital while 
providing a modest return on investment.
    We pride ourselves on successfully serving those 
traditionally left out of the economic mainstream: 38 percent 
of our borrowers are women; 85 percent are entrepreneurs of 
color; and over 36 percent are startups with less than 2 years 
in business.
    As we are in the midst of hurricane season, I would be 
remiss if I didn't bring up our commitment to disaster 
recovery. LiftFund clients and businesses along the Gulf Coast 
impacted by Hurricane Harvey have been served by our disaster 
relief loan program, thanks to investments by Goldman Sachs and 
JPMorgan Chase.
    Along with those two banks, Rebuild Texas and the OneStar 
Foundation provided operational funding and a guarantee fund as 
well. Together, we have provided over $7 million in capital to 
322 small businesses impacted by Harvey that did not qualify 
for SBA loans.
    The U.S. Economic Development Administration is also 
helping us continue this effort with a $3.5 million investment 
to continue the efforts into the second phase of rebuild.
    These next items are LiftFund's approach to improving our 
business model to ensure we sustainably provide products and 
services that bring financial inclusion. Our work requires us 
to raise debt to provide our financial solutions. That is the 
community loan fund model.
    To change this model, we have created the Dream Makers 
Fund, a permanent revolving loan fund where local donors and 
investors can provide equity into a local fund dedicated to 
serving the underbanked. Our goal is to create this fund and 
provide affordable capital in cities like Houston, San Antonio, 
and Dallas. This solution will reduce LiftFund's balance sheet 
challenges and meet the demand in providing capital to, and 
leveling the financial playing field for, the populations we 
serve.
    One of our biggest successes is our investment technology. 
LiftFund has created an internal micro-business risk model. You 
have heard of big data. Well, our risk model specifically 
focuses on serving underbanked entrepreneurs in the U.S., and 
we have a 96-percent repayment rate when we couple this risk 
model with our underwriting.
    Now more than ever, financial inclusion in Texas and the 
U.S. requires steadfast investment and participation at the 
local, regional, and national level.
    Finally, I should point out that none of this would have 
happened without the framework of CRA. In addition to the 
partnerships reflected, LiftFund currently has 36 bank 
investments totaling $35 million. Your important oversight 
ensures a CRA policy that is transparent, accountable, and 
mindful of the continued disparities of accessing credit.
    Without the CRA, the National Community Reinvestment 
Coalition (NCRC) estimates that low- to moderate-income 
neighborhoods would lose up to $105 billion in home and small 
business lending nationally, including a $24 billion loss in 
CRA commitments in the States that LiftFund serves.
    I hope the insights provided today give you a better 
perspective on how partnerships, CDFIs, and the CRA are vital 
to financial inclusion.
    Thank you for your time.
    [The prepared statement of Ms. Pena can be found on page 73 
of the appendix.]
    Chairman Green. Thank you for your testimony, Ms. Pena.
    Mr. Lindner, you are now recognized for 5 minutes.

    STATEMENT OF GARY LINDNER, PRESIDENT AND CEO, PEOPLEFUND

    Mr. Lindner. Thank you so much for the time to share our 
experience with you this morning.
    Small businesses are the economic hub that keeps the City 
of Houston, the State of Texas, and the entire nation moving. 
According to the Small Business Administration (SBA), last 
year, small businesses accounted for 66 percent of all new jobs 
in the country.
    In Texas, small businesses represent 90 percent of 
businesses in the State, but access to affordable capital and 
the tools to grow remain a critical challenge. In 2018, the 
Kauffman Foundation released a report stating that 81 percent 
of entrepreneurs cannot access a bank loan or venture capital.
    The barriers for entry for the diverse and low-income small 
business owners are mounting. Large banks continue to expand, 
while small and medium community banks shrink and underwriting 
criteria tightens. Since 2008, the number of banks with assets 
under $50 million has declined 41 percent, and large banks 
simply cannot make a profit on small, risky loans.
    Community development financial institutions (CDFIs) like 
PeopleFund were created to bridge the void between the banking 
sector and a business in need. Mission-driven and committed to 
underserved populations, CDFIs help startups, low-income, and 
minority borrowers by extending capital and wrapping funds with 
tailored financial education and technical assistance and 
guiding them on a journey to prosperity.
    At PeopleFund, we have a minority-majority staff and a 
minority-majority board, and that is to ensure our programs, 
products, and services are responsive to client needs and that 
everyone has a voice at the table. Our target market is 
minorities, women, veterans, and those in low- to moderate-
income census tracts. Ninety-seven percent of our loans go to 
our target market, greater than 65 percent to minorities, 
greater than 50 percent to startups, and greater than 50 
percent to women business owners.
    We also are very inclusive. We have loans to ex-offenders 
and to the LGBT community at a significant level.
    PeopleFund was founded as a nonprofit 25 years ago, and 
became a U.S. CDFI later on. We have all SBA products like 
LiftFund, $50,000 on the microloans, $250,000 on Community 
Advantage, and 504s up to $5 million.
    We also have been very successful in competing for new 
markets tax credits. It is our experience that right now, only 
two CDFIs in Texas have earned new markets tax credits, and 
that is PeopleFund and Texas Mezzanine Fund in Dallas. These 
projects are really important because they go to nonprofit 
projects and census tracks to provide essential services and 
create jobs. We have received over $100 million in new markets 
tax credit, and $28.6 million has gone to 4 significant 
projects in Houston.
    PeopleFund is the leader in veteran lending with financial 
support from two national banks. PeopleFund began a national 
program to provide veteran business owners and spouses with 
single-digit interest rate loans. Currently, 12 CDFIs have 
joined, and we cover 20 States and 60 percent of the veteran 
population.
    Although certified by the U.S. Treasury Department and the 
SBA, CDFIs are not subject to the same regulatory oversight as 
banks, however, we remain accountable to the 48 organizations 
that provide us with low-cost capital.
    We have greater latitude in our lending practices, and we 
can be agile to fill the gaps that arise. For example, in the 
wake of Hurricane Harvey, 90 of our clients with loans from 
PeopleFund sustained severe damage. In response, PeopleFund 
made a conscious decision that, under the circumstances, we 
would make loan payments for them with our capital for a period 
of 6 months.
    That was a game-changer, and I am happy to report that 
after that time, 88 of them are still in business; one of them 
passed away, and one of them made the mistake of leaving Texas.
    One other thing that I think is really important is that we 
are collaborative. We work with LiftFund. We work with all of 
the CDFIs in the country. And we think that is important from a 
collaborative standpoint. We work together on build projects, 
whether for people of color, for minorities, or any other 
segment of the population.
    Despite the fact that none of the businesses that we lend 
to qualify for a bank loan, we also lend to people with an 
Individual Taxpayer Identification number (ITIN), in this 
country. The 2018 default rate, despite our risky loans, has 
been less than 1 percent, and I attribute that to the education 
and training and the work we do as partnerships with our 
clients.
    Small businesses have the power to elevate communities, 
bring in critical goods, and spur future development, thus 
ensuring future generations have access to capital. CDFIs are 
the point of entry to spark this change.
    Thank you very much.
    [The prepared statement of Mr. Lindner can be found on page 
70 of the appendix.]
    Chairman Green. Thank you, Mr. Lindner, for your testimony.
    We will now recognize Mr. Johnson for 5 minutes.

STATEMENT OF GEORGE JOHNSON, CEO, GEORGE E. JOHNSON DEVELOPMENT

    Mr. Johnson. I want to thank you, Chairman Green, and your 
subcommittee for bringing this hearing here to Houston.
    I don't think that there is any doubt that discriminatory 
financial practices exist in minority communities, making it 
difficult to access capital for both homeowners and business 
owners in the creation and expansion of their businesses.
    The wealth gap continues to grow as homeownership declines 
from a high of approximately 57 percent to currently 47 
percent. In addition, minority businesses continue to struggle 
for much-needed capital for creation, acquisition, and growth.
    Major banks, for the most part, do not place bank branches 
in minority areas, nor do they actively offer borrowing 
opportunities to minority businesses. I believe one of the 
potential solutions promoting financial inclusion and to 
strengthen minority communities is through the partnership of 
major banks with minority-owned banks operated and located in 
minority communities to provide those banks with additional 
capital to operate.
    Another potential solution to promote financial inclusion 
is to increase funding to community development financial 
institutions (CDFIs). About 3 years ago, I received the 
opportunity to serve on a CDFI, on the board of directors for 
Houston Business Development Inc. (HBDi), a CDFI nonprofit 
501(c)(3) corporation established to stimulate economic growth. 
I was familiar with HBDi, however, I did not fully understand 
the number of ways the organization was serving the community, 
including training and education programs for small business 
owners.
    Under this particular CDFI, under the leadership of Mr. 
Marlon Mitchell, who is the CEO, and Mr. Larry Hawkins, who was 
the chairman of the board, HBDi started a program of buying 
abandoned and rundown properties in and around the Palm Center 
area, which is located in Southeast Houston, and tearing these 
buildings down and rebuilding commercial and residential sites. 
This effort is playing an important role in revitalizing this 
Houston corridor.
    Additionally, HBDi, as a U.S. Treasury-certified lender, 
extends loans to small businesses. And since its inception 33 
years ago, HBDi has facilitated over $98 million in small 
business loans and assisted thousands of aspiring entrepreneurs 
and business owners with accessibility or access to affordable 
capital and management assistance not readily available from 
banks and conventional lenders.
    This particular CDFI has also successfully administered 
several government-funded, non-bank loan programs designed to 
expand the capacity of small and minority business enterprises 
operated in low-income communities.
    Additionally, the corporation also operates an SBA-
certified development company making SBA 504 loans up to $5.5 
million throughout the State of Texas. The loan committee, 
which consists of professional current and former business 
owners, utilizes the same basic business prudence that other 
banks do, but the CDFIs have the opportunity to dig deeper and 
to make loans that typically banks--and national banks, in 
particular--would not make.
    Currently, this particular CDFI, Houston Business 
Development, Inc., serves approximately 5.5 in loans 
representing over 300 borrowers. The lowest loan is $3,000. The 
highest loan is in excess of $400,000.
    Because CDFIs have more latitude in reviewing community 
business and their needs, we feel that the increased 
capitalization of these proven organizations can make a huge 
difference in the creation and capitalization of businesses in 
a minority community.
    Chairman Green. Thank you for your testimony, Mr. Johnson.
    Please allow me to introduce now Mr. Raymond Ardoin, 
president of the board of directors of the Brentwood Baptist 
Church Federal Credit Union.
    And we assure you that you arrived quite timely. We 
accelerated the program. So, thank you for coming, and we 
greatly appreciate hearing from you at this time. You are now 
recognized for 5 minutes.

  STATEMENT OF RAYMOND ARDOIN, PRESIDENT, BOARD OF DIRECTORS, 
         BRENTWOOD BAPTIST CHURCH FEDERAL CREDIT UNION

    Mr. Ardoin. Good afternoon. And thank you for the 
opportunity to testify today on this very important subject.
    My name is Raymond Ardoin, and I am the board chairman of 
the Brentwood Baptist Church Federal Credit Union here in 
Houston. We are a small credit union currently with 833 
members, which was formed in 1992 by our church, Brentwood 
Baptist Church, and we are a low-income-designated credit 
union.
    We currently have total assets of $1.2 million. We have not 
entered the real estate and mortgage lending business, but we 
do offer automobile financing, share secured loans, signature 
loans, and secured debit cards to our members.
    Our credit union was formed to provide the availability of 
financial services to our church members. At that time, in 
1992, most members had proximity to a financial institution 
near their jobs, but there was no particular institutional 
loyalty, and most members complained about the cold, 
impersonal, and insensitive way that they were treated at 
banks.
    Our credit union worked diligently to provide our members 
with a fair and convenient place to save and borrow money. And 
although we do not currently handle real estate and mortgage 
loans, we know that the basic rules of credit extension are 
involved in all types of lending.
    Equal access to mortgage credit for minorities remains a 
serious issue. The Fair Housing Act makes it unlawful to 
discriminate in the rental or sale of housing or to impose 
different terms and conditions of a transaction based on race, 
color, religion, national origin, and gender.
    To avoid mortgage discrimination, minority borrowers should 
shop multiple lenders. Not only will that help you to find the 
best mortgage interest rate, but it could also identify lenders 
that are discriminating with higher rates or a lack of access 
to capital.
    If lending discrimination is suspected, the following are 
several other potential solutions that one should consider 
doing. First, contact the lender and enter a complaint. Contact 
their State attorney general's office and report it. Consider 
retaining a local attorney. File a complaint with the Consumer 
Financial Protection Bureau and the Department of Housing and 
Urban Development. Research and read reviews in an effort to 
find a better lender.
    One should also check that their chosen lender is committed 
to Federal anti-discrimination laws. Most good lenders announce 
this in the disclosures section of their website.
    Fortunately, although many of the banks in the U.S. have 
exhibited discriminatory tendencies, many minorities are 
finding success with online banks, where they find the color of 
their skin is less of an issue.
    Like many community banks, MDIs face difficulty accessing 
capital markets and competition from larger banks. In the 
aftermath of the most recent financial crisis, despite moderate 
improvements in earnings and capital levels, MDIs continue to 
struggle with compressed net earnings. In many cases, 
compounding MDI challenges are effects of economic hardships on 
MDI customers, many of whom reside in low- or moderate-income 
communities.
    In 2013, the Federal Reserve reaffirmed its commitment to 
MDIs in its Consumer Affairs Letter, ``Federal Reserve 
Resources for Minority Depository Institutions.'' This letter 
also discusses technical assistance that is available to MDIs 
through the Federal Reserve's Partnership for Progress Program, 
a national outreach effort to help MDIs confront unique 
business model challenges, cultivate safe banking practices, 
and compete more effectively in the marketplace.
    This concludes my testimony. Thank you.
    [The prepared statement of Mr. Ardoin can be found on page 
58 of the appendix.]
    Chairman Green. You have one additional minute.
    Mr. Ardoin. Well, I am all done with the--
    [laughter]
    Chairman Green. Thank you for yielding back your time.
    The Chair will now recognize Members, and each Member will 
have 5 minutes to ask questions.
    Ms. Tlaib, the gentlewoman from Michigan, is now recognized 
for 5 minutes.
    Ms. Tlaib. Thank you so much, Chairman Green, and thank you 
all so much for being here to talk about something that I think 
is incredibly important in our country.
    I know in my district, in the 13th Congressional District, 
we have lost more Black homeownership than anywhere in the 
country. So, this is an incredibly important issue.
    The Community Reinvestment Act came up at our field hearing 
in the City of Detroit as well. Just yes or no, do you think 
CRA is working now?
    Mr. Poyo. Yes, absolutely.
    Ms. Tlaib. You think CRA is working?
    Mr. Poyo. CRA is working for our communities.
    Ms. Tlaib. Yes?
    Mr. Smith. I think the strength of CRA is its flexibility, 
and I think it is also the weakness of CRA. So, I think it 
could be improved from where it is today.
    Ms. Tlaib. I am going to follow up with you on that, Mr. 
Smith, in a minute. Yes?
    Mr. Johnson. It could work better. It could be improved.
    Ms. Tlaib. Okay. So many people I have been talking to kind 
of on a frontline who do similar work in Michigan to what you 
all do, have talked about this idea around teeth. I think, Mr. 
Smith, you mentioned trying to incentivize big banks to do so?
    And CRA, to me, it is like getting that A grade that you 
are looking for, right? That is what they want to seek out. 
Now, it has become somewhat of a checklist. And some, you are 
like, why did they get a CRA credit, and they shouldn't have?
    So what I am trying to figure out is--and maybe you can 
answer, anybody on the panel--where do we fall short? Because 
some banks are--maybe on paper, it seems like they are 
following through on some CRA commitments that maybe require 
them to work with many of you on this panel, but where do you 
think they really do fall--where do you think it does fall 
short?
    Because in practice, it seems like our families are not--it 
is not increasing access to our families. Maybe a handful, but 
not as much as it used to. Mr. Smith?
    Mr. Smith. In my experience, in 20 years in the C-suite, it 
is pretty easy to invoke CRA regulations to say, well, if I did 
this, it is a safety and soundness concern for my bank. And all 
of a sudden, the regulators' ears perk up, and they say, ``Oh, 
well, we don't want you to do anything. That is a safety and 
soundness concern.'' So I can't really do this investment, but 
I can send 10 employees to do a weekend cleanup at the local 
neighborhood. And, ``Oh, well, okay. Well, that will be CRA 
credit.''
    I can substitute very easily the way it is written now with 
what I call low-hanging fruit, rather than the higher-hanging 
fruit that has more meat for the MDIs.
    Ms. Tlaib. We call that sustainability. We don't want 
trinkets. We want sustainability.
    Does anybody else want to add anything? Yes, Mr. Lindner?
    Mr. Lindner. Yes. Where it does work is we get an 
incredible amount of low-cost capital, around 2 percent, that 
we can relend. And that comes from large banks that are trying 
to get CRA credit. So we help them by lending to those whom 
they cannot lend to, and that is--
    Ms. Tlaib. Okay.
    Mr. Lindner. Now what I would also say is the net is not 
wide enough to capture some other banks that could potentially 
be supportive of low-cost capital for CDFIs.
    Ms. Tlaib. And if I may, Mr. Chairman, if I have a few more 
minutes--I am not sure--but I would like to ask all of you--
this is something that has been on my mind and has been very 
disturbing recently.
    The Department of Housing and Urban Development announced 
it would rescind enforcement of the 2013 disparate impact rule, 
a standard which is so central to the framework of the Fair 
Housing Act, which really ensures families are treated fairly 
with no discrimination when trying to secure housing and 
housing-related activities and services.
    Many of you, probably within your agencies, within your 
banking institutions, have folks who work on these specific 
issues around access, not just the lending. But can you talk a 
little bit about what this would do to your work on the ground 
when we can--and this is the only place--by the way, the Civil 
Rights Act has been watered down by the courts left and right. 
We now have to show a threshold, a higher threshold of 
intentional discrimination versus disparate impact. And we are 
going to try to restore that. I hope all of my colleagues 
support my bill when I introduce the Justice for All Civil 
Rights Act.
    But in this instance, them trying to do it in the 
regulations in this way, how is that going to impact your work? 
What do you think this would do to the people you serve?
    Mr. Poyo. This is a deeply problematic development. No one 
gives you a certified copy telling you that they have 
discriminated against you. And so many, many fair housing 
arguments and other civil rights arguments have to be made on 
the basis of what the impact is.
    For example, if you choose not to give mortgages on houses 
with a certain width, and it happens that all of the houses 
with that width are in a certain neighborhood in the city, you 
can say we have discriminated against no one because all we are 
talking about is the width of a house, when, in fact, all of 
the people who potentially want to buy that house, or a large 
portion of them, are of a given race.
    So gutting the disparate impact rules will, in effect, take 
the teeth out of our fair housing work in this country.
    Chairman Green. The gentlewoman yields back.
    The Chair now recognizes the gentlewoman from Texas, Ms. 
Garcia, for 5 minutes.
    Ms. Garcia of Texas. Thank you, Mr. Chairman.
    I wanted to start with Ms. Pena in sort of a follow-up 
question to my colleague's questions about the CRA.
    As a representative of a CDFI, how can the CRA be improved? 
I notice you said it was working. A couple of people said it 
needs improvement. But specifically to get them to focus on 
investments in communities of color, particularly when it comes 
to economic development?
    Ms. Pena. Sure thing. So one of the things in terms--there 
are several things. But the first would be that, as Gary 
mentioned, just expanding the network and looking at what 
assets are required to participate in CRA and thinking of that 
approach.
    Another area that, as you all know, is evolving is just 
online lending, and so we have a whole new arena of lending 
online. So, thinking about how they should be participating in 
oversight is also something--
    Ms. Garcia of Texas. Tell me what you think. What do you 
advise us? They should be complying just like banks?
    Ms. Pena. I think that there is probably more investigation 
and thought that needs to go into it. But I do believe that, 
based on our experience and what we have done in refinancing 
some of these deals, that there should be some consideration of 
fair lending opportunities to specifically address financial 
inclusion.
    I think that in terms of where we have seen the biggest 
challenge for folks who enter into merchant service accounts or 
do quick online loans is that there is a high interest rate, 
and it tends to be asset-stripping.
    Another element, as you all know, as native Texans, is just 
predatory lending in general, and that is not addressed through 
CRA, but we see that as a challenge as well.
    As it relates to CRA, in terms of sustainability, we think 
that the SBA 7(a) guarantee program provides a model where, if 
there were more guarantee programs, potentially, you would see 
more capital flow in allowing an organization like LiftFund to 
provide more capital with the purchases on the secondary 
market.
    I know there was a reference earlier to secondary market 
purchases from a home perspective. But the Woodforest example 
that I gave, the average loan size is $13,000. And so really 
thinking about, how do we approach in a way that allows us, as 
CDFIs who know our client base and provide more than just 
capital, but empathy, guidance, really a hand in a journeying 
experience for folks, so that more banks would invest in us. So 
I think looking at guarantee programs is another solution for 
us to really open up more capital to the clients that we serve.
    Ms. Garcia of Texas. When did you start your partnership 
with Woodforest?
    Ms. Pena. That has been in place now for 3\1/2\ years.
    Ms. Garcia of Texas. Okay. And the total number of loans 
that they applied for from you is 650 during that whole time 
period?
    Ms. Pena. Yes, ma'am.
    Ms. Garcia of Texas. Do you have partnerships like that 
with other banks?
    Ms. Pena. We had a previous one with Citibank that we had 
launched in 2010. Their footprint has evolved, as you all know, 
and they do not serve Texas anymore.
    Ms. Garcia of Texas. Okay. One last question for you. You 
say in your written testimony that the CRA's policy--that we 
need one that is transparent, accountable, and reflective of 
the continued disparities of accessing credit.
    What specific recommendations do you have for the 
committee?
    Ms. Pena. The first one would be specifically to expand, as 
it relates to including more banks with a bigger asset base. 
The second is in terms of--and we actually submitted a letter 
to the OCC specifically about addressing the varianced approach 
of that checklist that you were talking about to ensure that 
there is weight and really complexity and not just an effort to 
be present within the community.
    So, those are the three recommendations we actually had put 
into our letter to the OCC.
    Ms. Garcia of Texas. Okay. Thank you.
    Mr. Chairman, if I can just have one last question to Mr. 
Poyo, please?
    Mr. Poyo, you talked in your remarks and in your paper 
about barriers for the limited English proficiency customer. 
Could you expand more on that, and what we can do ensure that 
that data is collected and that it is reported and that we 
really fully address it?
    Mr. Poyo. Absolutely. One, it is, I think, incredibly 
important to think about limited-English-proficient communities 
as a market that should be served, not people whom we need to 
serve charitably.
    Certainly, in the efforts we have made to translate 
documents, in particular into Spanish, we have made a lot of 
progress. I think we need a lot more progress with regard to 
Asian languages, and many languages of African origin, Arabic 
and Farsi.
    But we need to go beyond just thinking about translation 
and looking at hiring in institutions that are delivering 
services and making sure that bilingual, bicultural people are 
out there across whatever industry you are looking at.
    And then, regulatory enforcement in other languages. For 
example, with the CFPB, when you look at the rules that are 
enforced and then you go to the Spanish language market, you 
don't see any enforcement in that language. And that is 
challenging, I grant, and yet there are millions and millions 
of people operating only in Spanish who deserve the protection 
of those regulations.
    And so I think we have to get beyond thinking only about 
translation as our solution and get to hiring and enforcement 
activities across multiple languages.
    Ms. Garcia of Texas. All right, thank you. I yield back. 
Thank you, Mr. Chairman.
    Chairman Green. Thank you.
    The Chair now recognizes the Chair of our Subcommittee on 
Consumer Protection and Financial Institutions, Mr. Meeks, the 
gentleman from New York.
    Mr. Meeks. Thank you, Mr. Chairman.
    Let me start with Mr. Poyo. As Chair of the Consumer 
Protection and Financial Institutions Subcommittee, we had a 
hearing not too long ago, and we discussed at length the 
seriousness of the concerns that I think that you talked about 
in your testimony, and that is the OCC go-alone position, as 
opposed to working with the Fed and the FDIC.
    The Fed appears to have taken a more thoughtful approach, 
in my opinion, and we have consistently encouraged all three 
regulators, including the FDIC, to coordinate their efforts and 
for them to move in lockstep.
    You discussed the risk of the the OCC's approach. Can you 
also tell us key factors that you think we should consider in 
modernizing CRA, including non-bank financial institutions, 
fintechs, and the branch loophole?
    Mr. Poyo. Yes, sir. Absolutely, we have this concern about 
the OCC moving without--and particularly the Federal Reserve. I 
think you are absolutely correct. The Federal Reserve has had a 
10-year process of examining updates to the CRA, which has been 
careful and gotten lots of input. And the OCC's approach in 
many ways, I think, began by disregarding those many years of 
effort at the Fed. And so, I think we should be looking to the 
Fed to take leadership on this.
    Some of the early statements by the Comptroller of the 
Currency about his intent with regard to CRA when he was first 
confirmed, he has not been repeating them lately, but we are 
very concerned about where that started.
    But I think that we need to look at a couple of key issues. 
You mentioned fintechs. And both with regard to CRA and with 
regard to fair lending practices, just because you use an 
algorithm to discriminate doesn't mean you are not 
discriminating, right?
    And so the same laws--if we are doing banking, if we are 
doing investment, and we have laws that cover the banks and 
create a level playing field among banks, we cannot allow the 
legs to be taken out from under institutions that are regulated 
by organizations that are going out and doing things like, for 
example, rating whether someone should be lent to based on 
their social network. Right? These are things that are deeply 
concerning, and because it is a new technology doesn't mean 
that new kinds of discrimination should be things that we are 
okay with.
    I also suggest that expanding the applicability of CRA 
helps to broaden that level playing field. I think regulated 
banks have a legitimate concern when they say, well, there are 
people doing mortgages and there are people doing--large credit 
unions that are doing the same business we are, and yet they 
are not covered. Fair enough. Let's bring everybody into the 
fold and cover financial institutions that are competing with 
regulated institutions, and the mortgage market in particular, 
into having a CRA obligation.
    Mr. Meeks. Thank you.
    Mr. Smith, I have been working on some legislation to 
promote minority banks, which have been disappearing at an 
alarming rate in my district. In fact, we have banking deserts 
that are there.
    And a few areas I have been paying particular attention to 
include the creation of programs for the Federal Government to 
deposit funds with minority-owned banks, creating initiatives 
for large banks to avail their technology platforms to minority 
banks, and holding bank regulators accountable for the lack of 
diversity of the bank examiner coops.
    Can you please speak in regards to those items, those 
issues, and any other areas that you consider critical to help 
promote minority banks?
    Mr. Smith. Yes, sir. I think all of them are critical. I 
think the work that you have been doing is spot-on, as far as 
what we need at our level.
    I would say that there seems to be a new momentum for 
capital investment, not just in preferred shares, if you were 
to purchase that, but in other investments that could be made 
to help the MDIs.
    But I think the CRA regulations have to be defined more 
specifically in areas of assisting MDIs. It is not the only 
thing that CRA is talking about, but that section that deals 
with MDIs and credits needs to be specific and more detailed.
    In addition to their involvement in us, we have things that 
we need the big banks' help on that are our loans. I will give 
you a great example. There is an Invest Atlanta right now, that 
the City of Atlanta is looking at some $40 million. They want 
to have, as part of their regulation, a minority bank to be the 
lead. They understand that the minority bank can't do it all. 
So, I have to have a big bank partner in order to participate 
in this Invest Atlanta.
    It's the same thing in Houston, and he same thing in other 
cities where we are. If we want to participate in a larger 
program that is maybe government- or city-based, I need a big 
bank to be a partner with me, and we can bring them in and 
share that.
    Mr. Meeks. My other question would be, I have found in 
certain communities where you don't have access to banking or 
banking services, this is where the payday loans come in. This 
is where the pawn shops come in, et cetera.
    What could we do? What kind of legislation? What do you 
think that we could do as Members of Congress to help the small 
minority bank, the bank that is in the community, to put these 
payday loaners out of business by getting folks back into 
regular banking? What do you think that we could do? What are 
we missing to make that happen?
    Mr. Smith. I think it goes back to the regulations. In 
other words, let's incentivize the big banks to give us 
programs that we can deploy--they don't have the means to 
deploy, but we can deploy in our neighborhoods, city block 
after city block, the Community Reinvestment Act on the street 
where the rubber hits the road. We can have it in community 
meetings. We can get the word out through our customers in a 
mailout. We can get the word out to our prospects by 
advertising in the paper that we have a loan program that is 
designed to take out the payday loan, for instance.
    But that program has to be backed by dollars. That program 
has to be backed by meaningful participation with a larger 
institution that would help do that. This is just one example. 
You could go on and on, whether it is car title loans, whether 
it is non-bank small business loans. These are at 18 percent. 
It is choking the business itself out of existence.
    Mr. Meeks. And if I have time, Mr. Johnson, I would like to 
ask you--yesterday, we had the opportunity to see the 
extraordinary work of you and your development company and how 
you have turned it around to make a difference.
    I think that you indicated that to a large extent, that you 
have done so without the aid of HUD or Federal dollars, is that 
correct?
    Mr. Johnson. In most of the developments that we have done 
in Corinthian Pointe, we did it without the aid of Federal 
dollars. We did have Federal dollars in the independent living 
facility. We had a grant through HOME funds through the City of 
Houston for $3.4 million to go with a mortgage loan from 
Trustmark Bank for $6 million to develop that particular site.
    Mr. Meeks. So the individual who has a business like you--
because I know a number. I know in New York, there are very few 
African-American developers who have equity in the land and are 
able to build. And many of them come to me, and they say they 
lack access to capital so they can grow and develop.
    What would you recommend be done so we can create more 
developers, such as you, and entrepreneurs who are hiring folks 
and making a difference in people's lives?
    Mr. Johnson. Capital is extremely important in real estate 
development across-the-board. Listening to all of the various 
organizations, major banks, when we were doing the project for 
the nonprofit in Corinthian Pointe, most of those loans were 
made through the major banks. We could not utilize the smaller 
banks for that.
    And that is why, one of the reasons that I mentioned that. 
And I continue to hear from these gentlemen there is just a 
tremendous need for capital. The smaller banks need more 
capital. In order to do most of these deals, we have had to go 
to Chase, to Wells Fargo, to Amegy Banks for these types of 
loans. When we go to the smaller banks, the capital is just not 
available.
    Chairman Green. The gentleman yields back.
    At this time, the Chair will recognize the gentleman from 
Missouri, Mr. Cleaver, who is also the Chair of our 
Subcommittee on National Security, International Development, 
and Monetary Policy.
    Mr. Cleaver. Thank you, Mr. Chairman.
    A number of you have at least touched a little on this 
issue. I represent Missouri. I always like to tell people I 
represent Missouri because they will ask me how are things in 
Kansas, and I haven't been there in months.
    But one of the concerns I have is that we have an 
agricultural component to our economy that depends on $80 
billion of Missouri products being sold around the world, the 
most significant of which, in terms of revenue, is soybeans.
    The tariffs are wreaking havoc all through the State of 
Missouri, whether you are eating soybeans or not. And we just 
had an announcement yesterday concerning one of our large 
companies, with probably 25,000 people across the globe working 
for them, and they just announced a big layoff in Kansas City. 
And of course, that is the home office, so I am nervous about 
what can happen. And we just ended the longest--well, maybe not 
ended, but we are experiencing the longest economic expansion 
in U.S. history.
    I am wondering what you believe--and I am interested, 
seriously--the Fed can and should do at a time like this, 
understanding that one of the mandates is, of course, making 
sure that employment remains steady, and how can that happen if 
we are beginning to see layoffs happen around the country?
    And so I thought maybe I could raise this issue to the 
intelligentsia, and then I can tell the Chairman of the Fed 
what he should do. Thank you.
    Mr. Poyo. Thank you, Congressman.
    You bring up an incredibly important issue that is 
obviously particularly relevant here in Texas, and for low- and 
moderate-income people.
    This Administration's erratic approach to trade and 
immigration policy has created some really significant 
headwinds, and we are seeing that. I will point you to a recent 
interview that was done with the president of the Federal 
Reserve Bank of Dallas at Jackson Hole, where he was asked 
about these issues.
    And in his words, he talked about how the trade and 
immigration policy are right now the fulcrum of the economy. It 
is what it is going to turn on, right, and we are seeing that 
happen.
    And his concern stated was that monetary policy is not 
going to be enough, one way or another, to overcome that. As 
they say, the headwinds created by a very strong trade and 
immigration policy heading in one direction, monetary policy 
can't solve everything, right?
    So, fiscal policy and trade policy simply just can't be 
outbalanced. And so, as we see the Fed right now I think trying 
to make some decisions about what to do with monetary policy, I 
think it would be problematic for us to expect that the Fed is 
just going to sort of balance us out of this situation. The 
core policies that we are seeing in trade and immigration are 
causing a huge problem in our economy right now.
    Mr. Cleaver. If we are trying to fight it from a government 
point of view, for example, the President decided to provide a 
$12 billion package to farmers who were wiped out last year. 
Now, for this year, it is $16 billion, which is, of course, 
what, $38 billion added to the deficit.
    So, even when you try to help the problem that you 
created--editorial comment, I apologize, but the President did 
create this--and then spend $38 billion to try to soften what 
he created.
    The President is demanding that the Federal Reserve reduce 
interest rates right now, and he is demanding all kinds of 
things. What you just said created some heartburn, but I 
appreciate your candor.
    And if anybody else would like to address this? Yes, ma'am?
    Ms. Pena. I would just add, and not necessarily from the 
Federal Reserve perspective, but thinking of the evolution of 
workforce development as it relates to entrepreneurship, and 
one of the things that we, as all organizations, see--whether 
they are coming to access capital or asking for guidance--is 
this notion of, should we have layoffs, what is our strategy of 
workforce development, and does it include an element of 
entrepreneurship?
    The gig economy continues to grow. It still has, obviously, 
its gaps from earnings perspective and asset-building. But can 
we, together and collectively, provide a pathway that allows 
workforce development, plus entrepreneurship, specifically as 
we see the evolution of people in tenured jobs as well?
    Mr. Cleaver. I kind of try to keep up on this, but there is 
no discernible strategy that I know about such that we can say, 
okay, this is what is happening today. But don't worry, in 3 
weeks, it will all be fixed, and we can be happy and sing 
``Kumbaya.'' If you had the Chair of the Federal Reserve 
sitting right here, would you advise anything or ask anything?
    Mr. Poyo. Congressman, I didn't mean to suggest earlier 
that there is nothing the Fed can do. I think that these 
tactical moves in interest rates downwards really can have 
substantive protection for low-income people who are being put 
in a very difficult position by the ups and downs in this 
economy.
    But I, myself, have some real doubts about whether even a 
significant move in interest rates is going to overcome what we 
are seeing as a really hard-driven policy, which is having 
clear negative consequences, ironically as much for a farmer as 
for a low-income person of color in urban America.
    We can help to kick the can down the road by doing debt 
subsidies, that maybe get somebody through to next year, but in 
the end, these are big levers that are being pulled.
    And so I think the Fed Chairman is not in a position to 
really point at Congress and say, ``Please do something about 
this,'' or the President, but, indeed, I think that is probably 
what he thinks to himself at night.
    Mr. Cleaver. Well, some of it ,I am sure we can't control. 
The EU is almost fighting for its existence. And what happens 
to the European economy ultimately is going to--right now, we 
are so inextricably connected that what happens with Brexit 
will have an impact on us.
    If you look at all of the things going on, this is a 
crisis. I don't know how much time I don't have left.
    Chairman Green. The gentleman's time has expired.
    But the Chair announces that there will be a second round, 
and Members will have an opportunity to continue. I would 
suggest that, with unanimous consent, we can do so. Without 
objection, it is so ordered.
    The Chair also asks unanimous consent that Mr. JP Park, 
president and chairman, Relationship BancShares, Inc., be 
allowed to give his testimony at this time. Without objection, 
we will hear from Mr. Park.
    Mr. Park, you will have 5 minutes. I will sound this bell 
when you have completed 4 of your 5 minutes.
    [Timer sounding.]
    Thereafter, when you are at the end, I will give you the 
gavel.
    [Gavel sounding.]
    Mr. Park. Yes, sir.
    Chairman Green. You may proceed.

   STATEMENT OF JEUNGHO ``JP'' PARK, PRESIDENT AND CHAIRMAN, 
                 RELATIONSHIP BANCSHARES, INC.

    Mr. Park. One of the potential solutions of the first panel 
issues is to increase numbers of minority depository 
institutions and the community development financial 
institutions.
    Recently, the numbers of minority depository institutions 
and the community development financial institutions being 
disappeared by M&A are much bigger than the ones of minority 
depository institutions and the community development financial 
institutions newly being acquired.
    Under this current situation, new start-up minority 
depository institutions or community development financial 
institutions critically experience difficulties raising initial 
funds covering capital and all other costs, et cetera.
    However, in reality, new start-up MDIs and CDFIs are mostly 
excluded from investment companies and the banker's bank to get 
some financial supports for initial forming stages. This means 
that there are many financial difficulties if forming groups do 
not have enough funds to cover by themselves.
    In addition, some MDIs and CDFIs which are suddenly grown 
to a bigger scale by M&A tend to dominate minority banking 
markets and to deteriorate its environments.
    How to resolve these issues of MDIs and CDFIs? It is to 
increase the numbers of MDIs and CDFIs to a certain degree 
which can be taken in current markets. To promote more numbers 
of MDIs and CDFIs, government should support how new start-up 
MDI and CDFI groups can have easier access to knocking on the 
doors of investment companies and the banker's bank.
    [The prepared statement of Mr. Park can be found on page 72 
of the appendix.]
    Chairman Green. The gentleman yields back his time.
    The Chair will now recognize himself for 5 minutes. 
Thereafter, we will have a second round. And each Member will 
be given a liberal amount of time, I might add, for the second 
round.
    Let me start with this premise. We have approximately--and 
I have just been given this information--92.5 percent of banks 
that are capitalized at less than $1 billion in assets, 92.5 
percent.
    I believe that this committee--and I speak for a good many 
persons, perhaps not all--would like to do something for the 
92.5 percent, the 92.5 percent that, as Chairman Meeks has 
indicated, did not have any impact on the financial crisis that 
we suffered in a negative way. They were not a part of the 
problem.
    We would like to do something to help the 92.5 percent. 
However, whenever we try to extricate the 92.5 percent from the 
others, the 7-some percent, we run into a problem, because the 
larger institutions seem to be holding the smaller institutions 
as captives. And it is difficult to extricate them from the 
larger institutions. It is difficult to get them to go on 
record and make comments that would be, in their opinions, I am 
sure, adverse to their best interest because we have already 
promulgated laws, regulations, and rules that allow them to 
associate with the larger institutions to grow. So, they are in 
a very precarious circumstance. It is enigmatic, to say the 
very least.
    So the question becomes, how do we deal with the smaller 
institutions--the 92.5 percent of all banks under $1 billion, 
how do we help them?
    I have learned in my brief time in Congress that we can do 
almost anything we want if we can get 218 people to agree. When 
we had the financial crisis, we went out of our way to save the 
big banks. We went out of our way to lend them money. We went 
out of our way to almost give them money. We didn't give it to 
them because they all repaid the money, and we made a profit. 
But we can do almost anything that we want.
    So the question is, what do we want to do to help the 
smaller institutions that are becoming extinct? What do we do 
to help them? Especially the good number that we finally have 
left that are minority-owned, how do we help them?
    Well, here is a thought. What if we, the Members of 
Congress, decided to establish a means by which a credible bank 
under $1 billion--a credible bank, with high ratings, no 
negatives, great with CRA, to the extent that a small bank can 
be great with CRA--what can we do to help them?
    What if we decided that the government will lend them money 
the same way we bailed out the big banks? If we can bail out 
the big banks, why can't we assist and aid the smaller banks 
who are suffering as a result of what occurred when we had the 
downturn in 2008?
    There ought to be a means by which we can do for the small 
banks, who are suffering now through no fault of their own, 
what we did for the big banks who are part of this--not all of 
them. You won't find one that will admit it--but not all of 
them who were a part of this downturn.
    So, I am going to look into legislation. I can't guarantee 
you that it will pass, but it is a part of my responsibility to 
be a part of the avant-garde with legislation, cutting-edge 
legislation. I am always living on the edge, it seems, and I 
don't mind being there.
    Let's talk about this. Would it be beneficial, Mr. Park, to 
have the opportunity for these stellar banks that are small to 
acquire some of their assets by way of some loan or some grant 
maybe from the Federal Government? Your thoughts, please?
    Mr. Park. Thank you, Chairman Green.
    The testimony I just gave is exactly what I am facing, the 
situations. I got a new bank approval, and I need to close on 
buying the bank by next week. This is a totally minority target 
bank--95 percent of our customers will be Asian immigrants, 
first generation.
    I have been in the banking service, in the Asian banking 
area for the last 18 years, and now I am trying to put in a new 
bank in Houston. But my difficulty is in capital-raising. Many 
people commit, but when they actually put money on the table, 
rather than what I expected, 20 percent, 30 percent, almost 40 
percent, they cannot commit, they cannot put the money that 
they committed to.
    And then, we knocked at an investment company. We knocked 
at a banker's bank. I never experienced a banker's bank other 
than this time, and so as long as our investors put in cash, 50 
percent, a banker's bank will help 50 percent. And all of those 
investors have good credit and strong financials, but actually, 
when we tried to talk with them, the banker's bank said no, 
this is your new start-up bank.
    And also, investment bank companies said, we do not want to 
look at that at this time because you are a startup. So what I 
want--and also the situation in the market, we both, U.S. 
Committee on Financial Services or Honorable Congressmen and 
women and also us, we better know what is going on in the 
market situations. As I pointed out in my testimony, recently, 
many bigger banks--
    Chairman Green. Mr. Park, let me just intercede and say 
this, I am really interested in your comment on my comment 
about the ability to acquire some degree of assistance from the 
Federal Government.
    Mr. Park. Yes.
    Chairman Green. Would that be beneficial, is the question?
    Mr. Park. Very beneficial.
    Chairman Green. Okay. Now, let me move quickly to Mr. 
Smith.
    Mr. Smith, you are the president of a small bank. Would it 
be of some benefit to you if the Federal Government provided 
some sort of aid and assistance to small banks with stellar 
records?
    Mr. Smith. Yes, Chairman, it would.
    Chairman Green. And explain to me how you think such a 
system might work. Quickly, please.
    Mr. Smith. Okay. In an investment of $2 million, $5 
million, whatever the number is, we could deploy that 
investment into growth strategies, into loan program 
strategies, into investment in new products and services to 
better assist the customer base, and probably give us some 
efficiencies of scale. There is just a lot of positives that 
could come from it.
    Chairman Green. Thank you.
    At this time, the Chair will yield back the balance of the 
time that I do not have and call upon Ms. Tlaib from Michigan 
for an additional round of questioning. And as I indicated, the 
Chair will be generous with the time.
    Ms. Tlaib, you are now recognized.
    Ms. Tlaib. Thank you so much, Mr. Chairman.
    I was listening to all of you in regards to the Community 
Reinvestment Act, and everything. One of the things that, for 
me, is very, very clear, is that there is a huge racial wealth 
gap in our country.
    And homeownership, as you know, is literally one of the 
primary ways that American families can really gain wealth. 
Small businesses, of course, are important, but if we can't get 
the homeownership rates up, it is just not going to work.
    And when Mr. Smith and others are talking about 
incentivizing, I almost feel like we are trying to force them 
not to discriminate, right?
    The Community Reinvestment Act didn't just come down from 
the sky. It came because there was redlining. And I feel like 
we are back there because we are not able to prove disparate 
impact. We are not able to prove that some of the structural 
kind of racism that is currently under this Administration is 
looking at the CRA examination in a very different light, even 
probably before with people there who are, again, looking at it 
in a very different light.
    But our Financial Services Committee staff does a 
tremendous job, and I want to read some of the data where it is 
very, very well-documented, the racial bias.
    The Center for Investigative Reporting review project 
examined 31 million Home Mortgage Disclosure Act (HMDA) 
records, and concluded that modern-day redlining persists in 61 
areas. It said specifically that the data showed that Black 
applicants were turned away at significantly higher rates than 
whites in 48 cities, Latinos in 25 cities, Asians in 9 cities, 
and Native Americans in 3 cities.
    The investigation went on and found modern-day redlining in 
at least 71 metro areas across the country, even though 98 
percent of the banks nationally still receive passing grades in 
their CRA exams.
    So I am a little confused, and I think maybe because I am 
new, Mr. Chairman, I don't know, But I am looking at this and 
saying, well, the Community Reinvestment Act, and I look at the 
history. I love understanding the institutional knowledge of 
where something came from. Why did we do the FHA? Why do we 
have this specific act that came forward?
    And I look at it because I want to know what were we trying 
to fix? What were you trying to remedy? And it is hard when you 
have the big banks, and we are trying to say, well, you want to 
go work with some of the MDIs and some of our other local, 
minority-owned banks, institutions, and so forth. But how do we 
stop, basically, the disparate impact? How do we stop the 
practice that, in itself, within these institutions is 
discriminatory?
    We are never going to find emails that say, ``Don't lend to 
Black people.'' But you know what we have found? If somebody 
comes in and they have an accent or Spanish is their first 
language, the bank will give them a higher rate. That is what 
banks are doing, and it is well-documented. We found a number 
of cases.
    Many of our States are involved in these cases, and they 
get these large settlements. But guess what? My colleagues and 
know this, and it hasn't remedied the situation because they 
continue to act badly, and they continue to intentionally 
discriminate through these practices.
    Again, we are never going to find direct emails. We have to 
rely on the whistleblowers. We have to rely on the people 
internally who say, ``I was trained to give a higher rate to 
the Black family,'' or, ``I was trained to do this.''
    One of the things that I talk to Chairwoman Waters all the 
time about is, ``You know, Chairwoman Waters, I really want to 
unpackaqe the credit score.'' We have to unpackage that because 
they put all of this data in there, because the more data they 
have, the more they can sell, because Equifax, TransUnion, and 
Experian are all for-profit entities. A lot of my residents 
think they are kind of quasi-government. We regulate them, but 
they really make money off of selling our data.
    But even if I was able to fix that, unpackage it--and we 
did introduce a bill, and many of my colleagues supported this 
bill that reduced people's debt. If your debt--you know how it 
stays for 7 years? Reduce it to 4 years. It passed out of the 
House Financial Services Committee. Hopefully, it gets out onto 
the Floor of the House and goes on to the Senate. And you know 
nothing happens there. But the point is, we are moving towards 
that direction.
    But even if I fix that for you all--and you know that needs 
to be fixed--I still have these kinds of practices happening. 
So I am asking, Mr. Poyo, Mr. Smith, all of you, I think we 
need to face the fact that you are working with some national 
banks. Maybe the CRA forced them to have to work with you. But 
in practice, we know that these national banks are not loaning 
to our people, and that is the increment problem that I think 
we are not addressing.
    Mr. Poyo. It didn't sound like the Congresswoman is new. 
You brought up the word, ``teeth'', earlier when you talked 
about this. And the interaction between fair lending exams and 
CRA exams, if you keep them in separate silos, and other sorts 
of exams, and you say, well, we have a problem here, but you 
are doing great over here, right?
    And so, it is very rare. While our regulators do have the 
ability and the discretion to take results in one place and 
have it affect another, it is rarely used, right, because they 
get a lot of blowback on that.
    But we have seen instances in which really problematic 
impacts on consumers impact something like a CRA rating. And if 
that were to happen more often, the CRA rating--whether you get 
a satisfactory or--has no consequence. But when you hit, 
``needs improvement'', there are some real problems that a bank 
has about opening and closing branches, about mergers, the 
kinds of things that banks really do care about from a 
financial perspective.
    And these days, many of our punishments, especially for 
large institutions, are fines, and they laugh and the next day 
they make the money over. Right?
    Ms. Tlaib. Oh, fines are the least of incentives. Like not 
the fine, but even--so one of the incentives are if you want to 
merge, you have to show you have been meeting CRA, and they 
even kind of cheat that little process.
    But it is trying to fully understand how these exams happen 
internally. And how do we really force them to be able to stop 
redlining and be able to force them to work with all of you 
more? I almost feel like we need to call it out and say, 
``Well, you are not working with us. That is discrimination. 
You are not allowed to do that in the United States of America. 
It is prohibited.''
    And we are kind of allowing it to be dismissed because I 
really do think we are in denial that it is actually happening, 
when the data continues to show that we are back--I mean, the 
numbers--and Chairwoman Waters knows this. We talk about it all 
the time. The numbers are as bad as they were before we passed 
the Fair Housing Act. That is how bad it has gotten.
    Mr. Smith. Congresswoman, you are accurate, in my opinion. 
I can tell you from the Unity National Bank perspective, most 
of the borrowers that we see loan requests from have been to 
three, four, or five banks, and they have all been turned down, 
particularly African-American women. They seem to be turned 
down six or seven times.
    And on a loan here recently that we did for an African-
American woman, I was really scratching my head trying to 
figure out how she got the first turndown, much less five 
turndowns. And I quizzed her repeatedly, ``Well, what exactly 
did the bank tell you that they didn't like about this deal?''
    And she just had these very vague answers because there was 
no specific reason to turn her down. And of course, we made the 
loan, and we are happy to have the loan.
    So all I can tell you is sometimes I struggle from my side 
of the desk when I look at these loan requests from minorities, 
and they have been turned down over and over again, and I am 
thinking, I was credit-trained by a billion-dollar bank, I know 
a little bit about what they think, and I can't find a reason 
that they would turn the loan down, but yet, they are 
repeatedly doing so.
    Mr. Ardoin. Congresswoman, I think whatever penalties are 
being imposed against these banks that are discriminating, it 
is not enough. I think the penalties just need to be increased. 
Because a slap on the hand for discrimination is not working, 
and it is not going to work until they really feel it. And I 
don't know what type of penalties that might be, but I think 
imposing stricter penalties would probably help solve the 
situation.
    Mr. Lindner. If I could, everybody that we lend to in 
LiftFund has been turned down by a bank. And the unfortunate 
thing or the frustration is, while we are trying to help those 
who are underserved--and we do that well--we are just a drop in 
the bucket compared to the entire national problem, and it is 
frustrating. We wish we could do more, and we do everything we 
can.
    Everybody here at this table that is in a CDFI role, we 
embrace the underserved because that is our purpose in life, 
socioeconomic justice. But the frustration is we cannot do as 
much as we would like to, and as I said, the problem is so 
overwhelming. There is a frustration from our standpoint that 
we couldn't do more.
    Chairman Green. The gentlelady's time has expired.
    The Chair now recognizes the gentlelady from Texas, Ms. 
Garcia.
    Ms. Garcia of Texas. Thank you, Mr. Chairman.
    And I must say before I start my questions that when I 
heard you speak about the bailout of the big banks and why we 
haven't focused on bailing out minority banks or providing some 
sort of assistance, I had just said the very same thing to my 
colleague from Missouri, because as I have watched things, 
especially after the financial crisis, it looks like the big 
banks got better, but the smaller banks and minority banks 
didn't really do much better.
    In fact, I think some of them have not done well at all, 
and you can count on me to support your legislation. And if you 
need an original cosponsor, I am here to serve, sir. We should 
move forward with that.
    Chairman Green. Sure. I accept the offer. And I believe 
that all of the Members will work together with us to get it 
done.
    Ms. Garcia of Texas. Thank you.
    I wanted to start with Mr. Poyo. To strengthen the minority 
depository institutions, the National Bankers Association has 
called for enhanced incentives from majority-owned banks to 
make CRA-qualified investments in the MDIs.
    Has your organization had any discussion or any preliminary 
working agreement with the National Bankers Association on what 
that might look like, to make sure that whatever they support 
is already inclusive and representative of what your membership 
may want to see happen?
    Mr. Poyo. We have not had any discussion with them about 
what that could look like. I think the suggestions about 
increasing the specificity in the CRA regulations around MDI 
investments is a good step.
    But I will say that it is an entirely other level than what 
the chairman was talking about. The idea of linking a favorable 
credit window to metrics of lending by MDIs, banks that are 
delivering to low- and moderate-income communities and to 
communities of color, actually linking to a credit window with 
a lower cost of capital is, from my perspective, not avant-
garde. It is prudent, and it is effective.
    And so, while I think it is important that we look at some 
of these regulatory steps, because maybe they are more 
achievable, I think that this is the sort of thing that really 
changes the game.
    Ms. Garcia of Texas. All right. My concern is that when we 
look at these things, if we are not at the table from the 
beginning, then, once again, we may be left out. And I know 
that in another subcommittee that I serve on--actually, it is a 
task force--we look at what happens with modern technology, the 
algorithms and the matrix that are designed into the computer 
systems before we even get started.
    Again, if we don't have people who know our communities, 
and who are sensitive biculturally or bilingually, they will 
design something that is just going to continue to 
discriminate. So, I think it is important that we look at that.
    Has your group, or anyone else at the table with your 
national groups, have you all started really working with the 
folks who design this software? Because we are seeing more and 
more technology in the banking systems and all financial 
services.
    Mr. Poyo. I had the privilege of serving on the Community 
Advisory Council for the Federal Reserve and advising the Board 
of Governors on issues, including fintech, and had advised some 
larger banks in their no-longer-early stages of developing 
these things.
    And one of the fundamental places we had to start with 
fintech is discrimination in discrimination out, right?
    Ms. Garcia of Texas. Right.
    Mr. Poyo. And one of the real concerns that we have is that 
in the fintech space, you have an even more fierce protection 
of code, of what is proprietary code, so creating a black box, 
in essence.
    And what is in that black box is deeply meaningful, and the 
speed with which machine-learning can now move you to deploying 
capital, right? Instead of deploying a product over 6 months, 
it is deploying over 2 months. And in that case, you can't 
catch a runaway train.
    So, we are very worried about the use of fintech to really 
put out products before they have been well-tested across 
markets because oftentimes, they are using credit scoring data 
and other data which is representative perhaps of a portion of 
our population, but not our entire population. And so, I think 
your concern and oversight in the area of fintech is incredibly 
important.
    Ms. Garcia of Texas. Thank you.
    And Mr. Chairman, if I can have one more, I wanted to ask 
Mr. Ardoin from the credit union, do you have any specific 
recommendations for us regarding how we treat credit unions as 
compared to banks, and anything else that you all may want to 
be doing that you are not doing now?
    Because it seems to me that what--this is a field hearing 
to see what is happening on the ground. And in the banking 
industry, in my financial services industry, nobody is more on 
the ground than credit unions. So, give us your thoughts on 
what we might be looking at?
    Mr. Ardoin. Like I said, my credit union is small, $1.2 
million in total assets. So, we are very small. I think up to 
$50 million is considered small.
    But your question, again, had to do with--could you repeat 
the question?
    Ms. Garcia of Texas. Is there anything that--any Federal 
rule or regulation that you think keeps you from doing 
something, serves as a barrier for you to be able to serve 
those customers because, again, you are the one there on the 
ground. That is where people go when they can't get the car 
loan somewhere else, when they can't even get help with buying 
furniture or just to get past it. Because if we don't make sure 
that you are working, then they are going to end up with payday 
lenders. And there is nothing I hate more than payday lenders, 
quite frankly, because I think payday lenders just make poor 
people poorer. So, we need the credit unions out there on the 
ground like yours.
    Mr. Ardoin. Right.
    Ms. Garcia of Texas. And we need to make sure that there is 
nothing barring you from serving those customers.
    Mr. Ardoin. No. We have all of the abilities of the regular 
bank. We have insurance by the National Credit Union 
Association (NCUA) of $250,000 per account, the same as the 
FDIC does for the banks, the same amount secured by the FDIC.
    We have fewer fees, which makes us a little bit more 
attractive from time to time, than banks. And I think we are 
more accessible and more friendly. So, I don't think that there 
is anything that bars us from doing what the banks do.
    Ms. Garcia of Texas. Okay. That is fair.
    What about Ms. Pena and Mr. Lindner? I know you nodded when 
I asked the question. I just wanted to get your opinion on 
that, on your ability to serve your customers.
    Mr. Lindner. Our constraint is just capital that we can 
deploy. And with regard to credit unions, as I said, they come 
under, obviously, the NCUA versus the CRA.
    Ms. Garcia of Texas. Right.
    Mr. Lindner. If I could just mention something?
    Ms. Garcia of Texas. Sure.
    Mr. Lindner. I think the most egregious lenders of all are 
the online lenders, the Kabbages and the OnDecks. Their 
interest rates are never disclosed, and it is somewhere up--it 
is as much as 50 to 75 to 100 percent. They are payday lenders 
but you just don't see the storefront.
    And so, I think that is the biggest threat to small 
business owners in their ability to sustain themselves. Because 
everybody wants money by sundown and they can get it by 
sundown, but that is more of a trap than it is a benefit to 
them.
    So I see that as--you know, we all work together, but the 
online lenders are taking advantage of people who need money 
and need it fast for their businesses. And the payday lenders 
are egregious, 390 percent in some cases.
    Ms. Garcia of Texas. Right.
    Mr. Lindner. But so are the online lenders. They are 
predatory. And they even had in the Wall Street Journal an 
article about how they are all going to disclose their interest 
rates. Well, that never happened, because they just don't do 
that.
    Ms. Garcia of Texas. Right.
    Mr. Lindner. And they draft out of your account every 
single day.
    Ms. Garcia of Texas. Right.
    Ms. Pena, did you want to add anything?
    Ms. Pena. Sure. I would just--to Chairman Green's comment 
of finding a place for supporting the 92.5 percent banks that 
are $1 billion and less, the answer should be, yes, find a way. 
But I also believe, just from the CDFI perspective, Treasury 
plays a big role in being able to help us create opportunities 
to build equity and assets so that we can serve more folks.
    So I believe, to Gary's point and to your question, that 
liquidity is our biggest issue. We actually had to reduce our 
lending goals this year because our balance sheet was 
overleveraged.
    So in order for us to be able to maintain, yes, it is a 
very fine balance as a community development financial 
institution to find the ability to meet the demand, but still 
meet protocol of financial soundness.
    Ms. Garcia of Texas. Sure.
    Ms. Pena. Thinking about things like that is very important 
to us. And using Treasury and supporting Treasury's work can 
allow us to, again, expand our impact without creating 
disruption within our organizations.
    The other thing, too, is the comment about CRA. There are 
other elements that could be measured. I think Gary brought 
this up, and also Noel, is that who financial institutions hire 
and who is part of their governance plays a key role in 
outcomes. And so, being able to figure out how do we measure 
that, Treasury measures and actually asks us to report on our 
advisory board and our board representation to ensure that we 
are accountable. And so, I think that is important.
    As it relates to technology, right now LiftFund is 
partnering with a credit union in building a microloan program 
that can meet the needs for credit unions and take our 
understanding of microlending to the next level. So, I think 
there are great partnerships that potentially can happen. And 
actually, that partnership came through Treasury as well.
    It is not enough, as Gary has mentioned, but I do think 
that there are certain things that could be enhanced, including 
just helping us with our liquidity to serve more people.
    Thank you.
    Ms. Garcia of Texas. Thank you.
    Mr. Johnson, did you want to say something on the predatory 
lending? I saw you nodding, too, so--
    Mr. Johnson. Yes. I would just amen everything everyone 
else has said.
    Ms. Garcia of Texas. All right.
    Mr. Johnson. The demand is there. The need is great. And we 
are all saying the same thing. We need capitalization. We need 
the funds to do a better job, the demand is just tremendous. We 
are on the ground in the community, and so many of the large 
banks are not. So I think increased funding to these 
organizations is the number-one thing that we need to kind of 
focus on.
    And I love your idea, Mr. Chairman, in reference to, if we 
could help the larger banks in their time of distress, we 
should be able to help the smaller institutions in their time 
of distress, which is now.
    Ms. Garcia of Texas. Thank you. And thank you all for what 
you are doing.
    I yield back, Mr. Chairman.
    Chairman Green. The gentlelady yields back.
    The Chair now recognizes the Chair of our Consumer 
Protection and Financial Institutions Subcommittee, Mr. Meeks 
from New York.
    Mr. Meeks. Thank you, Mr. Chairman.
    I am sitting here somewhat frustrated, to be quite honest 
with you, because it seems as though we are not moving in the 
directions that we should move to get things done. I am 
intrigued by Chairman Green's thoughts and look forward to 
working with him on it.
    To me--and maybe somebody can tell me where I am wrong--
there should be an opportunity, if given the support, to really 
grow businesses in these communities. There is a reason why 
payday lenders and pawn shop folks are in our communities. They 
are making money.
    Then on the flip side of that, I know in New York, as I am 
talking to the big banks and trying to hold them to the fire, 
what they are saying to me or to my communities is, ``It is not 
worth me staying there. I am going to close the branch. I am 
going to pack up and go. I don't even need that business. I 
don't make any money there'', which then leaves the ground even 
more fertile for somebody else who is going to come in because 
that person has no other alternative.
    What do they do? You can't get a loan from a big bank 
because there is none there. Small banks are closing. A 
person's car brakes breaks down. They are depending upon that 
car to get to work. They have to get it fixed. They go to look 
for a bank. There is no one there. They go someplace else, and 
get turned down. And, ah, they go to Mr. Payday Lender, and he 
says, ``Come right on in. I have some money for you.''
    That comes on top of a tradition where African Americans, 
because of racism in America, don't trust banks in the first 
place.
    My grandmother--I know I said I am from New York, but my 
grandmother is from South Carolina--would not put her money in 
the bank. She put it under the mattress. My mother--this is a 
true story. She passed away, and we were in the room, and 
underneath the rug, we found all kinds of money, even though I 
was trying to tell her how to invest some of it.
    So, Mr. Smith, you were telling me yesterday when we had 
the opportunity to visit Unity, for example, that something is 
wrong when a bank with your model can't get an outstanding 
rating in CRA, just satisfactory. That is something we should 
be able to work on.
    There is something fundamentally wrong with MDIs not being 
able to get outstanding ratings when that is who they are 
intended to serve. Something just seems wrong when we can't put 
these payday lenders and others out of business because we have 
reputable small, minority-owned banks that end up getting an 
individual into a financial banking habit.
    We went to one of the banks over on the Asian strip, and 
they were showing us how they had a whole section there just 
teaching people financial literacy when they walked into the 
bank, what to look for, how to do it. And I know that might be 
an additional cost, but some kind of way, we have to figure 
this thing out.
    Also, Mr. Smith, I lean on you again when you said that you 
have to try to figure out how people in the community who do 
have some money put the money in your bank, as opposed to going 
someplace else.
    Okay, so how do you reach out? How do we make that 
difference? How do we talk about keeping a dollar in a 
community so it can grow and benefit a whole lot of folks 
within that community when everybody else seems to be fleeing?
    Do you have any--I mean, I am leaning on you. And I know, 
Ms. Pena, what you are doing with women and the CDFIs there. 
And I might be mistaken, but Mr. Johnson, your business is a 
little different because capacity--I don't know whether or not 
there needs to be something where we can create better capacity 
there so that you can have the big dollars. But what you are 
doing, I don't want to inhibit you. But maybe the big banks are 
the answer for someone on a large development like that, a 
different scale of business. What do you say, Mr. Smith?
    Mr. Smith. Chairman Meeks, our ownership, Dr. Lawal, asked 
me a few years ago to come up with a bank model of 
profitability and get as small as I could, because we were 
interested in doing branches around Houston and other low- to 
moderate-income areas. And we were developing a program when 
Mayor-Elect Keisha Bottoms contacted us in Atlanta and said, 
``Would you come to Atlanta?''
    So we got on a plane and we went out there. Commissioner 
Rodney Ellis was with us at the time, Dr. Lawal and myself. We 
went to Atlanta, and we looked at a small, empty building in 
downtown Atlanta in the low- to moderate-income area, and we 
developed a plan of basically $10 million in deposits, and $10 
million in loans. We could have that branch profitable. And it 
was our prototype that we did in Atlanta. Why Atlanta, they 
asked? That is why. The Atlanta branch was open one year, and 
it was profitable on a monthly basis for us.
    With that success, we are looking at other areas, 
particularly where banks have abandoned the community. We were 
looking to put a Unity Bank in that area, and we were looking 
anywhere from Harlem in New York all the way to Acres Homes in 
Houston. We were looking anywhere that we can put up a branch 
that will help the low- to moderate-income communities have 
access to the banking and products and services that they 
deserve.
    Mr. Meeks. Would anybody else care to comment?
    Mr. Park. I totally understand, Mr. Meeks, your comment. 
But banking business is, in another sense, a risk-taking 
business. So we should have responsibility per CRA, et cetera, 
from regulators always say.
    And also, the bank is private company-owned, so we should 
pursue profit, too. On the other hand, we should do profit-
pursuing. Also in the other hand, we should follow the rules on 
the regulators' exams.
    So, for example, SBA loans, they ask us to do a lot of SBA, 
especially small express loans of less than $350,000 for lower-
income people. But lower-income people have very bad credit, 
and our guidelines do not meet what they have. So actually 
government people, regulators urge us to do more for the 
minority people, lower-income people, but actually examiners 
come. They just try to apply the same rules and regulations for 
some other very--the normal guidelines. This way, the bank 
really has a problem to follow, to stretch. The bank does not 
want to take that much risk.
    So, regulators should have some kind of a different 
guideline. For example, a bank should have strong minority 
target loan programs or some special products, and then they 
might have some more default loans. So when the examiner comes, 
they should understand.
    But mostly what regulators--what they say, to urge some 
more for minority lower incomes. But examiners, totally 
different people come. We don't care for that. So please 
understand that the banking business is a risk-taking business. 
So some kind of a risk, when we take for lower income, should 
be considered in exams.
    Chairman Green. The gentleman yields back.
    The Chair now recognizes the gentleman from Missouri, Mr. 
Cleaver, who is also the Chair of our Subcommittee on National 
Security, International Development, and Monetary Policy.
    Mr. Cleaver. Thank you, Mr. Chairman.
    I disagree with my colleague, Congresswoman Garcia, when 
she said she couldn't think of anything she hated more than the 
payday lenders. I hate the Oakland Raiders--
    [laughter]
    Mr. Cleaver. --but other than them, I am with her. And I 
struggle with this issue. Let me just tell you what happened, 
one of the most painful days I have had since we came in 
together. We have sat by each other for 15 years.
    We are trying to deal with payday lenders. The other side 
brought in--we have been beating up on the payday lenders. The 
other side brought in as their witness a school teacher--I 
don't know if you remember--from California, and she sat down 
right in front of us and said, ``I am a school teacher. I am 
college-educated. I need payday lenders.'' She said, ``If I 
need $300 or $400 to make it, I can't get it from a bank. I 
have to get it from a payday lender.''
    When she spoke--they called on us to speak--nobody would 
ask her a single question. Everybody was hesitant because, what 
are you going to do? You can't say that she is a stupid person, 
and she is being taken advantage of. This is a very complicated 
issue.
    And we are losing the banks. In 1985, in the United States, 
we had 18,000 banks, 18,000. Today, we have 5,500, give or take 
a couple hundred. So, we have consolidations and purchases as 
primarily the reason.
    But I think we need to rethink the whole issue. Because 
last summer, I spent a day at a fintech company in Fort Worth, 
frankly, in Fort Worth, where the CEO, I think, was 13-years-
old, and a COO was 12-years-old. Most of the other employees 
were either 8-, 9-, or 10-years-old. All of them are 
billionaires, and their parents have to deposit the money for 
them because they are too young to have bank accounts. But they 
don't have the same regulations that you guys are facing.
    And we have a number of other problems. They will say we 
can be much more racially sensitive because we don't know the 
skin color of people who are getting the loans. We know 
nothing, except their qualifications, because they use 
algorithms. Of course, there is an algorithm mind somewhere who 
designed it. But they are able to get the loans out--I don't 
think they can get it out the same day. I think they get it--
for many of the people who come to them, they get it out the 
next day. So, it is not like the same day. But it is a problem.
    And I don't know whether--Mr. Smith, the Fed discount rate 
doesn't apply to community banks, does it? The Federal discount 
rate, it is just--it does apply?
    [Nonverbal response.]
    Mr. Cleaver. Okay. What I am wondering is, could things be 
made lighter if the Federal discount rate is lower for smaller 
banks based on deposits? I don't know what kind of positive 
impact that would have. But as I am listening, I am thinking 
the Federal discount rate maybe ought to be at this level for 
giants and at another level for community banks. That could be 
a solution.
    The other thing I am trying to figure out we can do, 
because we don't want to keep having a war between the banks 
and the credit unions, as if it doesn't exist today already--
    Voice. We don't want to go there.
    [laughter]
    Mr. Cleaver. Yes, I shouldn't have even mentioned that. 
Forgive me, Lord.
    But I do know that people prefer a relationship bank where, 
when you go in, they know your name, they know your children, 
where they are in college. So, people prefer that.
    But I don't know. We struggle to try to figure out how to 
resolve this issue. I don't know if we have the same options to 
do what I think could be of help, and I think most of us are 
interested in doing what would be helpful.
    I am thinking that lowering the discount rate is 
something--because the Fed has to do it, rather than the 
Members of Congress. I don't know what impact we would have 
recommending it to the Fed, anyway.
    But if you have any other ideas on what you think we might 
be able to do that would help community banks and credit 
unions, I think we have a very, very open group of people who 
are doing it.
    And I have to tell you, I am going to become an enemy. 
FinCEN is under my subcommittee's jurisdiction, as are fintech 
companies, and the problem is, we are going to have to start 
seriously considering government involvement. I know they don't 
want it, and nobody else does. But if we don't, I don't know 
what is going to happen. Yes?
    Mr. Lindner. I would just ask you all to step up because 
fintech payday lending, you can see them. You can't see the 
fintech companies, and they are an enormity. Billions and 
billions of dollars are loaned to people who cannot repay, and 
it doesn't bother them one bit. There is no conscience 
whatsoever.
    We have watched them, and we see what they are doing, and 
it is just egregious. So, anything you can do to put your arms 
around the fintech companies--payday lenders, you can actually 
see them, but you can't see the fintech companies, and they are 
pumping out billions of dollars every month.
    Mr. Cleaver. Yes, I have seen it.
    Mr. Lindner. So the net needs to capture some of that, 
because that is what is costing a lot of small businesses their 
livelihood.
    Mr. Cleaver. The problem is that the people running those 
banks are juveniles, so you can't put them in jail. I have 
never seen one yet over 15-years-old.
    And just so the people out there know, I am kind of adding 
a little to it, that I am just saying that they are usually 
very young people, and they come up with this new technology, 
and they are getting richer by the second.
    Chairman Green. The gentleman yields back.
    I would like to recognize the presence of Mr. Marlon D. 
Mitchell. He is the president and CEO of Houston Business 
Development, Inc., that deals with financing the growth of 
small businesses. Thank you for being in attendance today, sir.
    Yesterday, we visited what is known as the ``International 
District,'' and we went there because within about a 1-mile 
radius, we have about 10 small banks, and some large banks, 
too. But we have these banks that have all found reasons to be 
located within a stone's throw of each other.
    And in visiting with the various CEOs and presidents, we 
discovered something that I found quite intriguing. A business 
model has developed such that the bank will purchase land and 
build a facility. The first floor belongs to the bank. The 
floors above the first floor are sold to business people with a 
fee simple, such that these other, let's say, nine floors, nine 
stories above, they tend to cover a lot of the cost that the 
bank has in initiating its entree into banking.
    We talked to a REALTOR who has purchased with fee simple on 
one of the floors, and these bankers are acquiring funds from 
the sale of these upper floors before they build the building, 
because they get commitments for the purchase with a fee 
simple, meaning they literally own that space that they are in.
    Tell me about this model in terms of how it can work in 
other communities? I need to add one additional thing. They 
have funded the businesses around the bank, and they pointed 
out specific businesses that they have funded that you can see 
from the bank.
    They chose an area. They are lending to small businesses. 
The small businesses are creating the jobs that Mr. Meeks talks 
about, this circle of inclusivity. That model seems to work 
quite well for the International District.
    So, let's start with whomever would like to be first. We 
have bankers here. We have others who can help us. Who would 
like to respond and give a comment on the model?
    Mr. Lindner, do you want to start with this? Are you 
familiar with the model?
    Mr. Lindner. Yes, I am. What I would tell you--and we have 
done this before--is partner with banks that want to do that 
and help the small businesses with financing as well. So there 
are some partnership opportunities with organizations like us 
and banks that are motivated to help small businesses, where 
they lend to them, if they can, or if they cannot, then we can 
probably lend to them. So, I think it is a great opportunity, 
quite frankly.
    Chairman Green. Mr. Park, you are about to open a bank, if 
it is God's will, and I pray that you will. Forgive me for 
using a word that I am very comfortable with that some are not, 
but let me ask you, does your business model include something 
similar to what I have just explained?
    Mr. Park. Yes.
    Chairman Green. Tell us how that business model will help 
you to get your bank off the ground?
    Mr. Park. At this moment, I cannot follow the model 
exactly, Mr. Chairman, as you pointed out, but as soon as we 
settle down, I have an idea and a strategic plan to follow that 
model. And also, I know--
    Chairman Green. Let me do this. To prevent you from saying 
something that you shouldn't say, rather than comment on your 
specific entity, just tell us how that model has worked. You 
have some knowledge of how it can work. So, just tell us about 
the model in general, if you would.
    Mr. Park. Okay. At this time, the model--I am trying to 
raise funds and make a new bank. It is very difficult to raise 
capital, but I don't have a choice with my investors who will 
make it. Because even though we tried to get some support, 
financial support from other institutions or fund companies, or 
whomever, it does not work out. So this time, we will make it.
    However, when we get some significant asset, $300 million, 
$400 million within the next 3, 4 years, and then that, Mr. 
Chairman, you brought up, the model is very attractive. And 
some minority groups, some banks, as you pointed out, are very, 
very successful.
    In the beginning, many community people did not really 
agree to that kind of model, but a local CEO initiated it, and 
it was very successful. So at this time, people know in the 
community that the model is very good.
    So when banks initiate that, a lot of people will join, and 
I think the bank and when, actually, a bank could get into a 
building, many other businesses are automatically in.
    Chairman Green. Let me intercede and ask this question, if 
I may, Mr. Park.
    Mr. Park. Yes.
    Chairman Green. Is it true that when you use this paradigm, 
this model, that the bank will finance the loan that is made to 
the business that desires to purchase the fee-simple property 
within the bank's structure, that building that we are talking 
about? Has that been your experience? Have you seen this occur 
where the bank finances a loan so that the business that is 
buying the property has a loan with the bank that happens to be 
on the first floor of the facility?
    Mr. Park. In my banking experience, I haven't done exactly 
that. But I saw a couple of very successful examples recently. 
So in the near future, I want to follow that model exactly.
    Chairman Green. Thank you very much.
    Mr. Smith, can you comment on the model, please?
    Mr. Smith. Yes, sir, Mr. Chairman.
    I have been financing fee-simple condo projects since the 
1980s. Whether the model is successful or not really depends on 
the cost and what the long-term costs are of the project. But 
we have had very successful ones in banking, and we have had 
some not-so-successful ones that I have seen.
    As far as the bank owning the property initially and then 
selling off floors or space above it, I think that could be 
done, but I think you have a lot of disclosure issues that you 
are going to have to go through to do that.
    One of the things I would worry about as a CEO of a bank 
would be, am I selling the second floor to one of my better 
customers who already has loans with me, and did I make it 
conditional that they buy this second floor so that they could 
continue that relationship? There are issues here that you 
would have to really cover.
    Chairman Green. It seems to me that good lawyers can be of 
benefit.
    Mr. Smith. That is right.
    Chairman Green. Apparently, there are good lawyers out 
there because we visited banks yesterday that have been 
successful with the model.
    Mr. Smith. We are going to look into it.
    Chairman Green. I can point you in the direction of a bank 
that exists that has used the model successfully. And according 
to what we were told, they don't have problems with the OCC. 
They are complying with CRA.
    This model seems to be one that was imported from Taiwan, 
maybe China, but it is something that originated elsewhere, 
such that you literally sell what is the equivalent of a 
condominium to a business in the same building the bank is in, 
and you have an HOA. It seems to work.
    Mr. Johnson, please?
    Mr. Johnson. Mr. Chairman, it is an excellent model. I 
think it works extremely well. You see it a lot in the medical 
area. You see quite a few office condos that a medical 
organization will design a building and then be the principal 
owner of that building and then sell condos. They create an 
organization to actually manage it. They generally are the 
general partner in that type of a deal, but it is an excellent 
model. And I agree with you. I think it could work with banks. 
And Mr. Smith, I would love to show you a potential project in 
the Missouri City area that could work for Unity Bank.
    Chairman Green. All right, Mr. Johnson, one more question. 
And then, Ms. Pena, I have one for you as well.
    Mr. Johnson, when we had an opportunity to visit Corinthian 
Pointe, we saw some 300-plus homes that were constructed. What 
was that number again, please?
    Mr. Johnson. It was 434.
    Chairman Green. 434. And you explained that the actual cost 
of the homes now, they are valued at what amount, would you 
estimate, please?
    Mr. Johnson. In the initial development, the homes were--
the starting sales prices were in the $80,000 to $120,000 to 
$130,00 price range. This was approximately 15 years ago.
    Now, those homes are in the estimated value of $150,000 to 
$190,000, so they have appreciated in value over the last few 
years.
    Chairman Green. And I am going to have to apologize. I do 
have some Members who will have to depart.
    Ms. Pena, I humbly apologize to you. I wanted to get more 
information.
    But suffice it to say, you started this with a not-for-
profit of some sort, did you not, Mr. Johnson?
    Mr. Johnson. Yes. The owners created what was called the 
Pyramid Residential CDC, and that was the developer for the 
project. The project, we created a tax increment reinvestment 
zone for that section of the development, and that provided the 
funding for the infrastructure for the development of the 
homes. The homes sold. It was the fastest-selling subdivision 
in the City of Houston in the year 2004-2005. So, it was a 
very, very big success.
    Chairman Green. And what is the worth of that project 
currently, in rough numbers?
    Mr. Johnson. The entire project as of last year has a worth 
of $178 million.
    Chairman Green. $178 million?
    Mr. Johnson. Approximately.
    Chairman Green. Okay. Thank you very much.
    I wanted to get that on the record of what a community 
development corporation, some sort of not-for-profit can do to 
enhance the value of the community, improve the lives of the 
people, and create jobs. The spinoff from what you have done is 
remarkable, and I want to compliment you.
    At this time, friends, I have to thank the witnesses for 
their testimony and for devoting the time and resources to 
travel here and share their experiences with us. Your testimony 
today has helped to advance the important work of the 
Subcommittee on Oversight and Investigations.
    The Chair notes that some Members may have additional 
questions for today's panels, which they may wish to submit in 
writing. Without objection, the hearing record will remain open 
for 5 legislative days for Members to submit written questions 
to these witnesses and to place their responses in the record. 
Also, without objection, Members will have 5 legislative days 
to submit extraneous materials to the Chair for inclusion in 
the record.
    Without objection, the hearing is now adjourned.
    [Whereupon, at 2:01 p.m., the hearing was adjourned.]

                            A P P E N D I X


                           September 4, 2019 
                           
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]