Show and Tell
A new act sheds some light on small-business lending to keep discrimination in check.
More than a quarter century after Congress passed the Home Mortgage Disclosure Act (HMDA)--and opened banks' books on consumer lending, inviting scrutiny and exposing discriminatory practices--a handful of politicians are now saying it's high time the same rules applied to small-business lending as well.
Introduced in November, the new Access and Openness in Small Business Act of 2001 would force banks to collect race and gender information from their small-business borrowers, just as they do from consumers. Or, at least, it would require them to ask for the data; the responses would be entirely voluntary. But the bill would reverse current Federal Reserve rules, which prohibit lenders from asking. "The [original] idea was, if banks collect this information, they'll discriminate," says Giles Giovinazzi, legislative counsel for U.S. Representative Jim McGovern (D-MA), who first introduced the bill. "HMDA [supporters] took the opposite tack, saying, 'We're going to force banks to disclose, because we can't monitor what's going on in that market.' " That kind of disclosure would be the guiding principle for the new bill. "Sunshine is the best disinfectant," Giovinazzi says.
Continue reading this article - and everything on Entrepreneur!
Become a member to get unlimited access and support the voices you want to hear more from. Get full access to Entrepreneur for just $5.
Entrepreneur Editors' Picks
-
These Co-Founders Are Using 'Quiet Confidence' to Flip the Script on Cutthroat Startup Culture and Make Their Mark on a $46 Billion Industry
-
My 7-Year-Old Daughter Started Selling Eggs. Here's What She Taught Me About Running a Startup.
-
Why You Need to Become an Inclusive Leader (and How to Do It)
-
Career Transitions You Can Make in Your 40s and 50s
-
Billionaire Naveen Jain Is an Expert at Disrupting Fields He Has No Experience In. His Secret Sauce for Building Multi-Million Dollar Companies? 'You Have to Come as Naive.'
-
4 Principles to Develop Next-Level Leadership at Your Company
-
This Filipino American Founder Is Disrupting the Beverage Aisle by Introducing New Flavors to the Crowded Bubbly Water Market