The Consumer Financial Protection Bureau today rescinded a 2020 advisory opinion on special-purpose credit programs, or SPCPs, saying the document contains statements that conflict with recent changes to fair lending enforcement and that the programs raise “serious constitutional concerns.”
The 2020 advisory opinion listed the content that for-profit organizations must include in written plans for implementing SCPCs under Regulation B of the Equal Credit Opportunity Act, or ECOA. It also clarified the research and data that organizations needed to justify the existence of the programs.
The CFPB recently finalized a rule revising how it enforces the ECOA, including setting new limits on SPCPs offered by lenders. In a notice in the Federal Register, the bureau said it is rescinding the advisory opinion in part because SPCPs could be read as “authorizing discrimination on the bases of race, color, sex or national origin.”
“Unambiguously, the constitution forbids the government from establishing programs that would discriminate in this fashion on the basis of race or color and sharply limits the circumstances in which government distinctions may be made as to sex or national origin,” the bureau said. “The advisory opinion not only implicates the overall constitutional propriety of SPCPs limited on such bases, but involves the government in expressly encouraging private actors to create those very programs.”
SPCPs have come under increased scrutiny during President Trump’s second term. In May, a Department of Housing and Urban Development official told attendees at the American Bankers Association’s Risk and Compliance Conference that the agency will closely monitor SPPCs like one in Washington state, which was created to address disparities resulting from past discrimination against racial groups. HUD has launched an investigation into Washington’s program.
