Joseph Otting, a former bank CEO who now regulates the industry, said on Thursday he’s not aware of an “old boys’ club” in banking that holds women and minorities back, a day after sparking criticism for saying he has never observed discrimination.
Otting, appearing before the Senate Banking Committee, faced sharp questions from Democrats about his views on discrimination. Sen. Sherrod Brown, the panel’s top Democrat, pressed him on whether minorities are disadvantaged in the banking industry because an “old boys’ club” is making the hiring decisions.
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“If there was a network like that, I wouldn’t support that,” said Otting, the comptroller of the currency, whose agency is responsible for enforcing fair lending laws. But he said he was “not aware” of it.
Otting on Wednesday repeatedly refused to tell the House Financial Services Committee directly that discrimination exists. Instead, he said, “People have told me it exists, so I trust them when they tell me that” — comments that Brown (D-Ohio) said Thursday were “unbelievable for any adult in America.”
Otting backpedaled in his Senate testimony, saying, “Just because I haven’t personally experienced it, I’m not saying it’s not evident in America today.”
His views on discrimination are closely watched because the Office of the Comptroller of the Currency oversees the Community Reinvestment Act, the landmark law that encourages banks to lend to low- and moderate-income borrowers. Otting is aiming to overhaul the CRA to make its application less subjective.
Democrats say they’re worried that Otting, who is the former CEO of OneWest Bank, would not make changes that would benefit poorer communities.
“I’m concerned that the man who ran OneWest, the man who said the banks are his customers — the banks, not the American people — who said he has personally never observed discrimination, is not the right man to rewrite the CRA,” Sen. Elizabeth Warren (D-Mass.) said.
Otting said two of his three top priorities — reforming CRA and encouraging banks to get back into payday lending — are aimed at “the people in America who need the most help.”
Pressed by Sen. Bob Menendez (D-N.J.), he said he believes there is discrimination in mortgage lending.
In his exchange with Brown, Otting referred to “instances amongst employee groups” he has observed over his career, which “get referred to HR.” “There’s investigations,” he said. “There’s corrective action. What I was saying is I personally have never experienced it.”
Brown pressed Otting on whether he has considered that OneWest’s board might have been made up entirely of men because “maybe people that look like you and me … have an advantage in hiring because we know people that look like us, and that’s who usually gets hired for banks.”
“I am proud to say we diversified that board under my leadership,” Otting said, before noting that he wanted to “correct the record” to say there is “lots of evidence of inequity in the world.”