America’s top consumer finance watchdog on Wednesday proposed reducing key civil rights-era anti-discrimination requirements for the financial industry, advancing President Donald Trump’s effort to reduce and eliminate policies he believes promote racial favoritism.
In an official notice, the Consumer Financial Protection Bureau (CFPB) said it is proposing to change existing rules to hold that the Equal Credit Opportunity Act of 1974, a landmark statute that prevents lenders from discriminating against borrowers, “does not authorize disparate impact liability.”
Reuters had previously reported that the CFPB planned to make the change. The agency did not immediately respond to a request for comment.
The removal of disparate impact liability, common in employment-related cases, eliminates a tool the government has used for decades to monitor racial and gender discrimination in housing, education, lending and other areas.
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US consumer protection agency proposes ending anti-discrimination requirements
Wednesday’s proposals are subject to 30 days of public comment before the agency can finalize the new regulations.
The legal doctrine is based on Supreme Court precedents and holds that business practices that produce discriminatory results, known as “unequal treatment,” are prohibited, in addition to intentional discrimination. If federal authorities stop enforcing disparate impact requirements, it will be more difficult to prevent discrimination across broad sectors of the economy, consumer advocates say.
The changes follow Trump’s executive order in April directing federal regulators to reduce regulations intended to prohibit policies and practices with unintended discriminatory impacts.
The change may be subject to legal challenges. During Trump’s previous term, the Department of Housing and Urban Development eliminated rules prohibiting housing practices with disparate impacts on protected groups, but that was stopped by a court, and later overturned by the Biden administration.
With information from Reuters
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