A coalition of consumer groups and fair lending compliance firms has filed a lawsuit to prevent the Consumer Financial Protection Bureau from removing disparate impact as a prohibited practice from Regulation B, which implements the Equal Credit Opportunity Act.
The ECOA prohibits creditors from discriminating against applicants on the basis of race, sex and other factors. President Trump last year issued executive orders directing federal agencies to “deprioritize enforcement” of statutes and regulations that include disparate-impact liability. Trump also directed agencies to revise their regulations to conform to the “single best reading” of a statute. The CFPB in April finalized changes to Regulation B to conform to the order, including narrowing the prohibition on “discouragement” and restricting special-purpose credit programs designed to increase access to credit based on race and other characteristics.
The lawsuit argues that the new rule would make it much harder to challenge banks and lenders for policies that unfairly hurt Black communities, women, immigrants and other historically disadvantaged communities, according to a joint statement by the plaintiffs. They said the CFPB ignored decades of law and “its own research showing discrimination in lending is still a critical problem.”
The lawsuit was filed in U.S. District Court for D.C. The plaintiffs are the consumer groups National Fair Housing Alliance and Rise Economy and the fair lending compliance firms BLDS and SolasAI.
