Members of the U.S. House Financial Services Committee grilled the new chairman of the Federal Reserve about racial disparities in lending earlier this week, citing an analysis by Reveal from The Center for Investigative Reporting.

It was Jerome H. Powell’s first appearance before Congress since succeeding Janet Yellen on Feb. 5.

Rep. Lacy Clay, a Democrat from Missouri, presented Powell with Reveal’s findings on St. Louis, where black applicants were 2.5 times as likely to be denied a mortgage as their white counterparts. What would he do to treat all applicants fairly and punish banks, Clay asked.

“Where there’s loan activity, houses have a chance to sell. Where houses sell, people move in. Where people move in, restaurants, community centers and grocery stores are built,” Clay told Powell. “And none or very little of that is happening in low- to moderate-income neighborhoods in St. Louis or elsewhere in this country.”

Based on millions of records available under the Home Mortgage Disclosure Act, Reveal identified 61 metro areas across the country where people of color were significantly more likely to be denied a conventional home loan. That was true even after considering an applicant’s income, the size of the loan, and the economic and racial breakdown of the neighborhood where they wanted to buy.

Powell did not offer a specific remedy, but told the committee the Federal Reserve would use its authority to crack down on discrimination.

“Racial discrimination in mortgage lending and in any kind of lending is completely unacceptable,” he said. “And wherever we have authority, we will use it to stop that from happening and punish it when it does happen.”

Rep. Keith Ellison, a Democrat from Minnesota who serves as deputy chairman of the Democratic National Committee, requested that Reveal’s reporting be entered into the Congressional Record.

Under questioning from Ellison, Powell said that the economic impact of denying people who qualify for a mortgage could be immense.

“If people are denied access to credit then they are going to be less able to attend school, less able to start a family, less able to move to a new job, all kinds of things,” Powell said. “Economic outcomes for that individual would be significantly reduced. And if you take that out across a broad population, it would certainly hurt the growth of the country.”

Powell also was asked to elaborate on his position on the Trump administration’s efforts to soften the Community Reinvestment Act, a 40-year old law that requires banks to solicit clients – borrowers and depositors – from all segments of their communities.

He said that he has not yet taken a position on how to best update the act and needed time to review the current process.

The administration began loosening regulations under the law last October, when the Office of the Comptroller of the Currency made it easier for banks to pass Community Reinvestment Act evaluations. Under new rules, banks could still comply with the law if their “discriminatory or illegal credit practices” were found to be “limited, technical, or immaterial.”

Earlier this month, the comptroller’s office met with members of the American Bankers Association to get their recommendations about how the act should be changed. A report the bankers association submitted in December complained of  “overly restrictive concepts of community and economic development” under the law.

The Federal Reserve is one of three government agencies that enforce the Community Reinvestment Act, inspecting banks to ensure they take steps to lend in low-income neighborhoods and to low-income borrowers.

Under Powell’s predecessor, Yellenwho took office in 2014 – the Federal Reserve reviewed 681 banks for compliance under the Community Reinvestment Act and declared all but seven “satisfactory” or “outstanding.”

Rep. Gregory Meeks, a Democrat from New York, said that the CRA needed to be updated but expressed concern that a bank’s history of documented discriminatory practices might not factor into its CRA review under the administration’s proposal.

“CRA was Congress’ response to widespread racial discrimination in the form of redlining,” Meeks said. “That was one of the primary reasons of the implementation of CRA.”

Aaron Glantz can be reached at, and Emmanuel Martinez can be reached at Follow them on Twitter: @Aaron_Glantz and @eman_thedataman.

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Emmanuel Martinez is a data reporter for The Markup. For the past six years, he’s worked in the same position for the investigative news outlet and public radio show Reveal in the San Francisco Bay Area, using data, statistics, and programming to tell stories. His most recent work examined access to homeownership and mortgage discrimination, where he analyzed 31 million housing records to prove that people of color were being routinely denied mortgages in 61 major U.S. metro areas. Emmanuel has also worked on a tool to help match unidentified bodies with missing persons’ reports, reported on why wildfires in the West are growing larger and sparking closer to homes, and dug into water shortages in California’s Central Valley, which produces a quarter of the nation’s food.

Aaron Glantz was a senior reporter at Reveal. He is the author of "Homewreckers: How a Gang of Wall Street Kingpins, Hedge Fund Magnates, Crooked Banks, and Vulture Capitalists Suckered Millions Out of Their Homes and Demolished the American Dream." Glantz produces journalism with impact. His work has sparked more than a dozen congressional hearings, numerous laws and criminal probes by the Drug Enforcement Administration, FBI, Pentagon and Federal Trade Commission. A two-time Peabody Award winner, finalist for the Pulitzer Prize, multiple Emmy Award nominee and former John S. Knight journalism fellow at Stanford University, Glantz has had his work has appear in The New York Times, Chicago Tribune, NBC Nightly News, Good Morning America and PBS NewsHour. His previous books include "The War Comes Home" and "How America Lost Iraq."