The FDIC today announced it had removed all references to disparate impact from its Consumer Compliance Examination Manual. Instead, the agency said it will evaluate potential discrimination under the Equal Credit Opportunity Act and Fair Housing Act “only through evidence of disparate treatment.”
President Trump in April issued an executive order to eliminate enforcement of disparate-impact liability, which since the early 1970s has allowed courts to halt policies and practices that, while facially neutral, seem to exclude people based on characteristics such as race, gender and disability. The administration alleged that such liability “handcuffed” employers by requiring them to consider race and “racial balancing” to avoid legal liability.
The Office of the Comptroller of the Currency in July removed references to disparate impact liability in its documentation and directed examiners to no longer look for it in their bank exams. In a financial institution letter, the FDIC said it is removing disparate impact from sections on the exam manual regarding fair lending and unfair, deceptive and abusive practices.
