By Douglas Gillison
WASHINGTON, April 21 (Reuters) – The U.S. federal consumer finance watchdog agency on Tuesday formally ended certain civil-rights-era antidiscrimination requirements for the lending industry, according to a notice in the federal register.
The change from the Consumer Financial Protection Bureau made good on a directive from President Donald Trump to curtail long-standing policies he views as a burden on businesses, but that advocates say are fundamental to protecting the rights of American consumers.
Federal regulations no longer require that, under the 1974 Equal Credit Opportunity Act, lenders prevent policies and practices with unintentionally discriminatory results for borrowers, known as “disparate impacts.” Prohibitions against explicit and intentional discrimination remain in place.
Curbing disparate-impact liability, which is common in employment-related cases, removes a tool the government has used for decades to police racial and gender discrimination in housing, education, lending and other areas.
The change finalized by the CFPB raises the possibility of legal challenges from consumer rights organizations who have denounced the change.
Disparate impact legal doctrine is rooted in Supreme Court precedent. However, the White House has argued that the doctrine undermines equal opportunity, and that it hinders businesses from making hiring and other employment decisions based on merit and skill.
Ceasing to enforce disparate-impact requirements will make preventing discrimination in large sectors of the economy much harder, consumer advocates say.
(Reporting by Douglas Gillison in Washington; Editing by Chizu Nomiyama)
