In the United States during the 20th century, women encountered “invidious
distinction,” irrational, non-economically based discrimination, when they attempted to secure credit. Creditors forced them to find a male cosigner, discounted their income and made them navigate extra obstacles when they tried to secure a loan. This dissertation investigates the form of that discrimination, and how it was due to the 20th century credit market.
Women's advocates ended credit discrimination because of a three-pronged approach that included organizational measures to advertise their problems, legislative attempts to outlaw that discrimination, and institutional responses to work around their credit problems. They were able to largely beat discrimination by raising consciousness, introducing new regulations, and showing the mainstream credit market that women were fair credit risks. At the same time, changes in the economy and consumer credit made invidious distinctions against women more costly for creditors as they searched to expand their market for consumer credit. This dissertation will bring together this part of the women's movement with the economic and consumer history of the 1970s as a way to enlighten and strengthen both of them.
This dissertation also describes how women responded to that discrimination. A
number of women from a variety of political and social backgrounds came together to fight against this invidious distinction. First, female bank customers who had issues with credit access spoke out about their problems. Next, working women who could not get any credit on their own terms alerted policymakers as well as women's and consumer organizations about their dilemma.
Next, women's groups and credit activists attempted to secure federal legislation
to outlaw credit discrimination, which culminated in the passage of the Equal Credit Opportunity Act (ECOA) in 1976. By building on state laws, commission meetings, and testimonies given in legislative committee hearings, legislators in the Senate, namely Bill Brock (R-TN) and the House Committee on Banking and Currency created a bill designed to outlaw credit discrimination and inform potential credit customers of their rights. While everyone on the committee was on board with that task, arguments from the credit industry both in the committee hearings and in the regulatory process at the Federal Reserve weakened the bill substantially. However, the few studies that measured the Act’s effectiveness found less evidence for gender-based discrimination after 1977 than before.
Last, female bank leaders opened a number of women's banks, banks owned by
and especially marketed towards women, across the country as a way to offer women
another route to capital and convince other banks that women were good credit risks. Some of these banks languished because they were never able to balance their goals of helping all women secure capital and behaving like a profit-seeking bank. Others succeeded because they had consistent leadership and found a better place for themselves in the market.