by the El Reportero wire services
The Trump administration has intensified its immigration agenda by directing federal regulators to increase scrutiny of credit applications from people who are not legally authorized to work in the United States. Immigration advocates say the move could discourage some families from seeking financial services.
Federal banking regulators issued new guidance advising banks, credit unions and other financial institutions to consider the immigration status of certain loan applicants when evaluating credit risk. The guidance states that borrowers without legal work authorization may face less stable income or the possibility of deportation, factors that could affect their ability to repay loans.
New federal guidance tightens credit evaluations for some immigrants without work authorization.
“When a borrower’s income is derived from employment that is not legally authorized, the source of repayment may be less reliable and may present increased credit risk,” the federal guidance states.
The recommendations stem from an executive order signed by President Donald Trump in May directing the Treasury Department and other federal agencies to strengthen oversight of risks to the financial system associated with unlawful immigration. The order does not require banks to verify the citizenship of all customers or to close accounts held by undocumented immigrants.
Banking industry representatives had raised concerns over earlier proposals that would have required financial institutions to collect citizenship information from every customer. The administration ultimately adopted a narrower approach focused on credit risk assessment and compliance with existing financial regulations.
Immigrant rights organizations argue the new policies could discourage many families from using banks or applying for loans out of concern that their immigration status will receive greater scrutiny. They warn that the changes could push some people toward alternative financial services that often carry higher costs and fewer consumer protections.
The Trump administration maintains that the new guidance is intended to protect the stability of the U.S. financial system, strengthen fraud prevention efforts and ensure financial institutions properly assess lending risks. Federal officials have emphasized that the guidance does not create a blanket requirement for banks to verify customers’ citizenship or immigration status before opening or maintaining deposit accounts.
Sources: Reuters; U.S. Department of the Treasury; The White House.
