President Donald Trump issued an executive order Tuesday (May 19) that could potentially restrict financing to undocumented immigrants.
What we know: Trump presented the executive order, “Restoring Integrity to America’s Financial System.”
The order aims to point out illicit activity, strengthen customer identification requirements for financial institutions, and address the credit risks posed by extending financial services to non-work-authorized illegal aliens.
Zooming in: Specifically, the order directs the Consumer Financial Protection Bureau to consider modifying its regulations to clarify that potential deportation and loss of wages are factors that could affect a borrower’s ability to repay a loan under “ability-to-repay” standards.
The order also directs Federal financial regulators to bring forth guidance on managing the credit risks of extending loans and financial services to illegal aliens without work authorization.
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“Extending mortgages, credit cards, and auto loans to illegal aliens who face potential removal or loss of wages creates structural credit risks that threaten the safety and soundness of the national banking system,” the White House stated in its fact sheet.
“When banks are forced to absorb these elevated credit risks, the costs are passed on to American consumers in the form of higher fees and interest rates – restoring sound underwriting standards puts money back in the pockets of law-abiding Americans.”
Previous restrictions: This federal order follows a tightening of access to auto registrations, most notably in Texas. A Texas law that went into effect last November restricts access to motor vehicle registration without a Texas driver’s license; an unexpired U.S. passport; Texas License To Carry identification; and IDs issued by the U.S. military, Department of Homeland Security, Citizenship and Immigration Services, and Department of State.
Texas dealers must verify identification on the application for the original title.
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