Trump Allies Take Aim at ‘Woke’ Lending Rules—Colorblind Credit Battle Ignites

Paul Riverbank, 1/13/2026Colorblind credit battle: Should banks ask about race and gender—or risk untracked discrimination?

Critics see this as a symptom of a lingering “DEI” (diversity, equity, and inclusion) bureaucracy meddling where it shouldn’t. Enter America First Legal—a group closely connected with policy advisers from the Trump administration. Their view, as expressed by Gene Hamilton this week, is pointed: why should any American have to declare their race or gender to get a home loan? For them, it’s as simple as filling in the credit score, not your background.

This isn’t just theoretical. Hamilton warns that asking about race or sex could backfire and expose borrowers to fresh discrimination—ironically, under the guise of preventing it. “The disclosure of this information leaves applicants vulnerable to race- and sex-based discrimination by government and private actors in violation of federal civil rights law and the Constitution,” reads a statement by the group.

But scratch below the surface, and the argument gets more complicated. Proponents of data collection fire back: Abandon these questions, and you may well abandon oversight. For decades, banks have found subtle ways—sometimes deliberate, sometimes systemic—to approve loans for some but not others. Without regular reporting, watchdogs say, there’s no way to catch ongoing patterns or measure progress.

Civil rights advocates point to recent history—think redlining or the disparate approval rates for Black and Latino borrowers in some zip codes—as proof oversight rarely polices itself. To them, scrapping these requirements is an invitation to sweep bias under the rug. The concern isn’t abstract; if nobody tracks who gets turned away, there’s no easy way to challenge a lender’s motives.

On the other hand, a vocal chunk of critics argue the mere existence of demographic questions may nudge people toward seeing difference where it may not matter, or worse, invite quota-style thinking in lending.

The legal brawl isn’t unfolding in isolation, either. In a related twist, federal guidance that prevented banks from using immigration status as a blanket reason to deny a mortgage has now been rescinded. Russell Vought, current acting head of the CFPB, argues this is a long-overdue tweak that lines up with what the law has said for decades: “We are correcting the last administration’s attempt to ignore these well-accepted and common-sense principles of our nation’s fair lending laws.”

To put it bluntly, these changes are part of a much broader conservative turn in federal policy. Think sharper immigration rules and less oversight from Washington when it comes to what banks can ask of their customers.

Lori Sommerfield, an attorney who’s spent years tracking federal fair lending law, sums it up with a certain world-weariness: “The withdrawal of this joint guidance really underscores the Trump administration’s two key priorities: a harder line on immigration and a continued effort to scale back enforcement of the federal fair lending laws.”

The real-world impact? Well, for immigrants in particular, the shift can quickly become practical, even punitive. Kris Kully, another lawyer deeply involved with mortgage regulation, notes that even a single requirement—like producing a Social Security number—can make securing a home loan far trickier for people who’ve called the U.S. home for years but haven’t finalized paperwork.

Banks don’t have it easy, either. Federal law is clear: The Equal Credit Opportunity Act says you can’t deny credit based on critical factors like race, gender, or national origin. But it also clearly carves out an exception, letting lenders ask about citizenship or legal status—which leaves plenty of room for interpretation and inconsistency.

All of this comes as the CFPB makes its case for more funding and a firmer position in the financial landscape. The tug-of-war over data collection and fair lending isn’t going away anytime soon—and for the millions trying to buy a house, what gets put in (or left out) of the fine print makes all the difference. Is merit, measured solely by credit score, enough to keep things fair? Or does ignoring background lull us into repeating the worst chapters of American inequality? The answers—like the problems themselves—refuse to be simple.

There’s a fresh battle brewing over the paperwork you fill out when applying for a mortgage—a fight that’s less about the questions themselves and more about what America wants to be. At the heart of the dispute is a standard form from the Consumer Financial Protection Bureau (CFPB), which has required banks to note details like an applicant’s race and sex every time someone tries to buy a home.Critics see this as a symptom of a lingering “DEI” (diversity, equity, and inclusion) bureaucracy meddling where it shouldn’t. Enter America First Legal—a group closely connected with policy advisers from the Trump administration. Their view, as expressed by Gene Hamilton this week, is pointed: why should any American have to declare their race or gender to get a home loan? For them, it’s as simple as filling in the credit score, not your background.This isn’t just theoretical. Hamilton warns that asking about race or sex could backfire and expose borrowers to fresh discrimination—ironically, under the guise of preventing it. “The disclosure of this information leaves applicants vulnerable to race- and sex-based discrimination by government and private actors in violation of federal civil rights law and the Constitution,” reads a statement by the group.But scratch below the surface, and the argument gets more complicated. Proponents of data collection fire back: Abandon these questions, and you may well abandon oversight. For decades, banks have found subtle ways—sometimes deliberate, sometimes systemic—to approve loans for some but not others. Without regular reporting, watchdogs say, there’s no way to catch ongoing patterns or measure progress.Civil rights advocates point to recent history—think redlining or the disparate approval rates for Black and Latino borrowers in some zip codes—as proof oversight rarely polices itself. To them, scrapping these requirements is an invitation to sweep bias under the rug. The concern isn’t abstract; if nobody tracks who gets turned away, there’s no easy way to challenge a lender’s motives.On the other hand, a vocal chunk of critics argue the mere existence of demographic questions may nudge people toward seeing difference where it may not matter, or worse, invite quota-style thinking in lending.The legal brawl isn’t unfolding in isolation, either. In a related twist, federal guidance that prevented banks from using immigration status as a blanket reason to deny a mortgage has now been rescinded. Russell Vought, current acting head of the CFPB, argues this is a long-overdue tweak that lines up with what the law has said for decades: “We are correcting the last administration’s attempt to ignore these well-accepted and common-sense principles of our nation’s fair lending laws.”To put it bluntly, these changes are part of a much broader conservative turn in federal policy. Think sharper immigration rules and less oversight from Washington when it comes to what banks can ask of their customers.Lori Sommerfield, an attorney who’s spent years tracking federal fair lending law, sums it up with a certain world-weariness: “The withdrawal of this joint guidance really underscores the Trump administration’s two key priorities: a harder line on immigration and a continued effort to scale back enforcement of the federal fair lending laws.”The real-world impact? Well, for immigrants in particular, the shift can quickly become practical, even punitive. Kris Kully, another lawyer deeply involved with mortgage regulation, notes that even a single requirement—like producing a Social Security number—can make securing a home loan far trickier for people who’ve called the U.S. home for years but haven’t finalized paperwork.Banks don’t have it easy, either. Federal law is clear: The Equal Credit Opportunity Act says you can’t deny credit based on critical factors like race, gender, or national origin. But it also clearly carves out an exception, letting lenders ask about citizenship or legal status—which leaves plenty of room for interpretation and inconsistency.All of this comes as the CFPB makes its case for more funding and a firmer position in the financial landscape. The tug-of-war over data collection and fair lending isn’t going away anytime soon—and for the millions trying to buy a house, what gets put in (or left out) of the fine print makes all the difference. Is merit, measured solely by credit score, enough to keep things fair? Or does ignoring background lull us into repeating the worst chapters of American inequality? The answers—like the problems themselves—refuse to be simple.