Today, the Legal Defense Fund (LDF) filed a public comment calling on the Consumer Financial Protection Bureau (CFPB) to withdraw a proposed rule limiting federal enforcement to stop credit discrimination. The proposal would also rescind policies that allow lenders to expand access to credit to underserved borrowers, including Black communities. Specifically, the CFPB proposes revising Regulation B, which describes the anti-discrimination obligations of banks and other covered lenders under the Equal Credit Opportunity Act.
This proposed change comes after President Trump signed an executive order targeting disparate impact liability, a legal framework that has long served to identify and address discrimination that hides in plain sight, embedded in the structures of lending, hiring, housing, education, policing, and health care. Federal agencies have recognized that the Equal Credit Opportunity Act prohibits disparate impact discrimination for over 50 years.
Alongside the comment, Demetria McCain, Director of Policy at LDF, issued the following statement:
“CFPB’s proposal to roll back anti-discrimination policies is legally unsound and unjustified.
“Gaps in credit access for Black and other underserved borrowers remain a persistent issue across the United States. The data is clear. The CFPB has provided absolutely zero evidence that gaps in credit access for Black and other underserved borrowers have closed. Given the ongoing discrimination faced by Black borrowers in particular, the CFPB and other federal financial regulators should be stepping up enforcement actions, not rolling back protections.
“If this rule takes effect, Black people seeking credit or loans could face significantly more challenges in accessing housing, starting a business, or purchasing a new car. Indeed, the entire economy will suffer increasingly negative impacts if Black people’s economic power is continuously sabotaged. And given the credit market’s increasing reliance on artificial intelligence and algorithmic decision-making systems that are known to produce racial biases, disparate impact enforcement is particularly critical.
“We urge the CFPB to reverse course.”
Read the full comment here.
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Founded in 1940, the Legal Defense Fund (LDF) is the nation’s first civil rights law organization. LDF’s Thurgood Marshall Institute is a multi-disciplinary and collaborative hub within LDF that launches targeted campaigns and undertakes innovative research to shape the civil rights narrative. In media attributions, please refer to us as the Legal Defense Fund or LDF. Please note that LDF has been completely separate from the National Association for the Advancement of Colored People (NAACP) since 1957 — although LDF was originally founded by the NAACP and shares its commitment to equal rights.
