Document 33: "Plank 6: Credit," from National Commission on the Observance of International Women's Year, The Spirit of Houston: The First National Women's Conference (Washington, D.C.: U.S. Government Printing Office, 1978), pp. 30-31.
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PLANK 6
CREDIT
The Federal Equal Credit Opportunity Act of 1974 should be vigorously, efficiently and expeditiously enforced by all the Federal agencies with enforcement responsibility.
The Federal Reserve Board should conduct a nationwide educational campaign to inform women of their rights under the law.
Background:
"A widow with an income of $25,000 a year…
was refused an American Express card."
It has always been more difficult for women to obtain credit, mortgages, and loans than for similarly situated men. The Federal Equal Credit Opportunity Act, passed in 1974, made it unlawful for anyone to be denied credit on the basis of sex or marital status. The Act was amended in 1976 to prohibit discrimination on the basis of race, color, religion, age, national origin, the receipt of public assistance, or previous exercise of right under consumer protection legislation. But the law has not been enforced vigorously enough to eliminate credit discrimination against women. Too many women are still denied credit when they want to buy a car or a home, start a business, or finance an education.
Why the law was passed Public hearings held by the National Commission on Consumer Finance in 1972 found that women were routinely discriminated against. It was hard for a single woman to obtain credit; married women could not get credit in their own names. Creditors were unwilling to count the wife's income when a married couple applied for a loan or mortgage. And when a woman was divorced or widowed, she had a particularly difficult time reestablishing credit for herself.
Provisions of the law The Federal Equal Credit Opportunity Act makes such discrimination illegal. The most important provisions are:
A woman may not be refused credit because she is a woman.
She may not be refused credit because she is single, married, separated, divorced, or widowed.
Creditors may not ask about her childbearing or birth control plans and cannot refuse to count her income because she is of childbearing age.
Alimony, child support, and part-time earnings may not be discounted as income.
A woman will be able to keep her own credit accounts and her own credit history if her marital status changes.
A homemaker will be able to build her own credit record because new accounts must be carried in the names of both husband and wife if both use the account.
If she is denied credit, she can find out why.
Enforcement The Act can be enforced in two ways: by private litigation or by actions brought by the 12 Federal agencies charged with overseeing compliance in the institutions that they regulate or monitor.
Many women's groups, consumer advocates, and civil rights organizations believe the compliance agencies, with the expectation of the Federal Trade Commission, are not doing an effective job. Enforcement problems have been cited by attorneys in the Federal Reserve Board's Equal Credit Division.
Some of the specific charges:
Although the Equal Opportunity Credit Act has been in effect for more than two years, enforcement procedures are still being written. Only recently have agencies begun training their examiners and revising their handbooks to include credit discrimination.
No effective punitive action is mandated for creditors found to be violating the law. Linda Cohen, NOW Credit Task Force Coordinator, characterizes a recently proposed enforcement policy as "a slap on the wrist." There is no threat of significant financial penalty for violators, no suggestion that persons who have been discriminated against be advised of their right to sue, and no mention of how long and how badly an institution may violate the law before serious action will be taken.
Some enforcement agencies have a conflict of interest. If an agency advises a consumer that she has the right to sue, this may be harmful to the institution that the agency is charged with regulating.
No cease and desist orders have been issued by the regulatory agencies. Other than in the Federal Trade Commission, the only lawsuits filed have been initiated by individuals.
Discrimination continues. Since the law went into effect, the following cases have been documented in newspaper stories and by the National Credit Union Association:
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A well-paid professional woman was told by her credit union that only a portion of her salary could be counted in a loan application because she is of childbearing age.
A Washington woman with no outstanding debts and a good credit rating was turned down in her request to buy furniture on an installment plan because part of her income is from child support.
A widow with an income of $25,000 a year from Social Security and her husband's estate was refused an American Express card because she didn't have a job.
A black woman was refused a mortgage because her home had no basement. She sued when she discovered the lender had made loans on other homes without basements.
A Texas woman earning nearly $10,000 in a management job was refused a $500 loan because she wouldn't ask her unemployed new husband to cosign the note. Before her marriage she had repaid three separate bank loans of $1,000 each.
A divorced college professor, owner of a house and two cars and a substantial bank account, was denied a department store credit card in her own name but permitted to continue to use an old card in her former husband's name.
Learning credit rights The speed with which ECOA becomes a practical reality will also depend on the rapidity with which American women learn their credit rights.
"Very few women have heard of ECOA," notes Linda Cohen. "They sit in credit offices and don't even know they're being discriminated against. If they knew their rights, they'd say ‘treat me fairly or else.’ And they would not be discriminated against."
Eileen Shanahan, a former New York Times economics reporter, had to quote from stories she herself had written about the law in order to get a department store credit card in her own name. "If I had trouble, the ordinary woman who wasn't as positive about the law would have lost the argument," she says.
Establishing credit history One valuable provision of the law is apparently being largely ignored. The nonwage-earning homemaker who shares her husband's accounts—by using the charge card to make a purchase, or by writing the checks to pay the bill—may now have the identical credit history in her name as well as his. This is automatic on new accounts but must be requested for established accounts.
Between June 1 and October 1, financial institutions sent out 310,000,000 information notices with a form to be returned if a woman wanted the account to be listed in her name as well as her husband's. A spot survey conducted by the Commercial Credit Corporation found a response rate of only nine percent. Yet this provision is potentially vital to all women. Census Bureau studies show that 85 percent of American women will be on their own at some time during their lives. The Federal Government must spearhead an educational campaign to teach all women that their financial survival may depend on their ability to use their credit rights.
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