March is Women’s History Month. Visit the National Archives website for resources and virtual events related to women’s history. Today’s post comes from Callie Belback from the National Archives History Office.
Today in the United States, anyone above the age of 18 can apply for a credit card or a loan and be considered solely on the basis of their credit history. However, this was not always the case.
Before 1974, credit market obstacles prevented women from fully entering the consumer economy that arose in the U.S. after World War II. Women applying for a credit card or a loan could expect to be asked a host of personal questions. These questions often pertained to their marital status and asked whether women had available and willing male co-signers such as husbands, brothers, fathers, uncles, or friends.
Even if the woman had full potential to repay the loan or credit card, banks would often discriminate based on reasons that had no bearing on financial abilities. Without a male co-signer, banks were unwilling to lend a woman money, severely inhibiting a woman’s financial freedom and economic opportunities.
In the 1971 seminal legal case, Reed v. Reed, Ruth Bader Ginsburg co-wrote a brief arguing against a provision of an Idaho state law regarding the preference of men over women as administrators of an estate. The court agreed with Ginsburg and her colleagues, ruling unanimously that dissimilar treatment “on the basis of sex” between men and women was unconstitutional. This ruling paved the way for the Constitution’s 14th Amendment and Equal Protection Clause to be applied to gender discrimination cases.
Three years later and amid a wave of activism, Congress passed the Equal Credit Opportunity Act (ECOA) in 1974. The ECOA specifically banned discrimination against a financial borrower on the basis of sex or marital status.
In 1976 Congress passed a bill, H.R. 6516, titled “Equal Credit Opportunity Act Amendments of 1976,” that amended the ECOA to include the prohibition of discrimination on the basis of race, color, religion, national origin, age, and receipt of public assistance benefits. Thus, when considering applicants for a loan, banks were required to consider their creditworthiness only.
However, banks were still allowed to inquire about marital status, participation in public assistance programs, and age “if the information sought is not used in a biased, unscientific, and arbitrary manner to affect creditworthiness.” The bill also required creditors “to respond within 30 days (except when the Federal Reserve Board allows a longer period) to any credit application and to provide, as a minimum, a statement of specific reasons when refusing an applicant, if requested.”
The bill also allowed the “Attorney General as well as private citizens to initiate suits where discrimination in credit transactions has occurred.” Federal agencies such as the Office of Management and Budget, Federal Reserve Board, Federal Deposit Insurance Commission, United States Commission on Civil Rights, Department of Justice, and many more stamped their approval of the bill.
On March 23, 1976, President Gerald R. Ford signed the bill into law. He then gave a statement to the public in which he affirmed his administration’s commitment to “the goal of equal opportunity in all aspects of our society. In financial transactions, no person should be denied an equal opportunity to obtain credit for reasons unrelated to his or her creditworthiness.” President Ford ended his statement by saying, “It is with great pleasure that I sign a bill that represents a major step forward in assuring equal opportunity in our country.”
Listen to the October 19, 1971, Reed v. Reed oral arguments (file 3) that have been uploaded into the National Archives Catalog.