CFPB proposes amending disparate impact rules

The Consumer Financial Protection Bureau proposed amending provisions related to disparate impact standards.

Details: The proposed rule would:

• Provide that the Equal Credit Opportunity Act does not authorize disparate impact claims.

• Amend the prohibition on discouraging applicants or prospective applicants to clarify that it prohibits statements of intent to discriminate in violation of ECOA and is not triggered merely by negative consumer impressions.

• Amend the standards for special-purpose credit programs offered or participated in by for-profit organizations to include new standards and related restrictions.

Input Deadline: Comments on the proposed rule are due by Dec. 15.

Recent Agency Actions:

• The FDIC in September removed all references to disparate impact from its consumer compliance exam manual and said it will evaluate potential discrimination under ECOA and the Fair Housing Act only through evidence of disparate treatment.

• The OCC in July announced that it removed references for disparate impact liability from the “Fair Lending” booklet of the Comptroller’s Handbook, started removing references in other materials, and instructed examiners that they should no longer examine for disparate impact.

Background: Under a disparate impact approach, a bank may violate fair lending laws by creating a disparate impact when a neutral policy or practice results in disproportionate burdens on or illegally excludes a protected class.

ICBA View: ICBA strongly supports equal access to credit while consistently supporting amending fair lending laws to clarify that disparate impact without a finding of intentional discrimination does not violate fair lending.