WASHINGTON—After the 2008 financial crisis, regulatory reform efforts sought to make the system safer. This time, the goal will be to make it fairer.
In keeping with President Biden’s focus on helping minorities and people with low and moderate incomes—groups hit hardest by the coronavirus-induced downturn—financial regulators are expected to emphasize racial equity as they focus on consumer protection and expanding access to financial services.
That would mark a departure from the last time Democrats controlled the White House and Congress at the start of the Obama administration. Early efforts then centered on fighting the crisis, followed by a push to ensure that it would never happen again with the Dodd-Frank Act of 2010, the most sweeping financial legislation in a generation.
“Obama looked at how to make the financial system stable,” said Karen Petrou, head of Federal Financial Analytics, a regulatory advisory firm. “Biden is looking at, ‘How do we make the banking system just?’ That’s very different.”
In practice, that will translate into tougher rules on payday lenders—who charge high rates of interest on short-term loans—and stronger enforcement of fair-lending requirements, an administration official said. Biden’s team will also push to establish a government-backed consumer credit firm as an alternative to the companies that create credit reports, the official said.