Holding voted against funding for investigations like one targeting family's bank

Congressional rules didn't forbid the votes, but ethics watchdogs said last week that Holding should have recused himself. Not doing so, "reflects poor judgment," said Paul S. Ryan, an attorney with Common Cause in Washington, D.C.

Holding said the measures were broad in effect, affecting a number of industries the same way they were likely to affect First Citizens Bank & Trust, where his cousin, Frank, is chairman and chief executive. The congressman himself owns between $1 million and $5 million worth of stock in the bank, according to his latest financial disclosure.

During the summer of 2015, George Holding and other congressional Republicans voted on a series of amendments blocking funding to the U.S. Department of Justice and U.S. Department of Housing and Urban Development. The amendments forbid funding for investigations brought under a theory called "disparate impact," which is used to bring cases when potentially discriminatory business policies are not openly racial, but their results clearly show disparate impacts on minorities.

Conservatives and a number of business interests were pushing back at the time against the Obama Administration's use of this methodology to pursue fair housing claims.

At the time, First Citizens Bank & Trust was the subject of a HUD inquiry into whether the bank discriminated against minority loan applicants. The case against was investigated both under the theory of disparate impact as well as a methodology that looked at actual intent, the department said.

Congressional ethics rules leaves it to members to decide whether they should recuse themselves from votes that could affect family business. In fact, the rules press members to vote unless they have "a direct personal or pecuniary interest," noting that, otherwise, the hundreds of thousands of people each member represents in Congress "are denied a voice on the pending legislation."

Ethics watchdogs said last week that Holding's votes on disparate impact meet the letter of that rule, but the rule is a weak one, and he should have gone beyond it.

"There is a conflict here," Ryan said.

"You don't see family members very often stepping into that type of litigation," said Craig Holman, government affairs lobbyist for consumer advocacy group Public Citizen. "I would strongly recommend that he should have recused himself."

Holding said in an emailed statement that his votes were meant to rein in a government overreach affecting banks, real estate companies and apartment complexes.

"I voted against ‘disparate impact’ because it is a bad idea," Holding said. "The amendments I voted for, in order to stop ‘disparate impact,’ treated everyone the same way."

House rules speak to this point, saying members may vote on issues that affect "a class as distinct from individuals."

HUD's inquiry involved statistical analysis of loan rejections dating to 2010. The department accused the bank's South Carolina branches of rejecting mortgages for black and Latino applicants at disproportionate rates, showing preferential treatment of white applicants. The bank, HUD said in case documents, could not explain these discrepancies away.

At the time reviewed, First Citizens in South Carolina was separate from First Citizens in North Carolina, though the Holding family held controlling interests in both and the two have since merged. In addition to a new training program and new hires required by the settlement, the bank agreed to give at least $140,000 to nonprofits that provide financial literacy services to first-time homebuyers and to spend $20,000 marketing products to majority-minority areas in South Carolina.

The bank formally promised not to discriminate on race or national origin in the future, and HUD said bank officials were very cooperative.

A Democratic operative suggested last week that WRAL News look at First Citizens' HUD case and Holding's votes on disparate impact. Holding said in his statement that "everyone agrees" intentional discrimination is illegal and wrong.

"The question – when it comes to ‘disparate impact’ as a legal theory – is does it prove intentional discrimination?" he asked.

"HUD had the power to look at how many apartments a businessman – who had no intention of discriminating against anyone – rented and say, ‘We think you should have rented more apartments to minorities,’" he said. "Then the government agency could accuse him or her of discrimination. Disparate impact gave government agencies the power to accuse innocent people of breaking the law based on statistics – rather than hard facts."