The American Bankers Association today expressed support for a Department of Housing and Urban Development proposal to rescind the use of disparate impact in determining Fair Housing Act violations, saying the rule in question did not provide clarity “and has been the subject of an unhelpful back-and-forth between administrations.”
HUD in 2013 published a disparate impact rule under the FHA, formalizing a burden-shifting test for determining whether a given practice has an unjustified discriminatory effect. Two years later the Supreme Court established safeguards to ensure that disparate impact claims do not violate the Constitution’s equal protection clause. However, after numerous legal challenges, the Biden administration in 2023 reinstated the 2013 rule despite the high court ruling.
Earlier this year, HUD proposed rescinding the rule. ABA pointed to the lengthy legal battles over the rule in a letter to the agency.
“ABA and its members have long supported the fair and even-handed enforcement of laws prohibiting discrimination in lending, including the FHA and implementing regulations,” the association said. “Banks spend significant resources on fair lending compliance and on outreach to increase access to home ownership. However, the past tug-of-war between administrations over the rule’s text has been disruptive to banks’ efforts to maintain strong fair lending compliance management systems.”
“In 2015, the Supreme Court ruled on disparate impact and announced the safeguards necessary to ensure that constitutional problems do not arise from disparate impact claims,” ABA added. “Courts will continue to apply these standards to disparate impact claims, and those judicial interpretations will provide the needed clarity and predictability.”
