The agenda notes the bureau is reexamining the requirements of the Equal Credit Opportunity Act concerning disparate impact in light of Supreme Court and congressional disapproval of the guidance.
“The [CFPB] thinking about a rulemaking shows the bureau is serious about potentially addressing disparate impact in a much more formal way than the bureau previously hinted at,” said Chris Willis, a partner in Ballard Spahr‘s Atlanta office and practice leader of the firm’s litigation and consumer financial services groups.
The industry interest in a possible rulemaking will be significant, Willis said. Auto finance, in particular, has felt the sting of the fair lending whip in recent years. “A rulemaking once in place will be a binding interpretation of the statute until the rulemaking is altered or undone, which would take a year or more to do.”
The new question is how the bureau is going to go forward with disparate impact regarding a ruling, and how carefully it will define a rule for it that is imperative, Willis said. “Will the bureau carefully define disparate impact and go down a different road? Will it go down the causation aspect of defining an inclusive community?”
“There is no way to know how it’ll go,” Willis added. “It’ll be interesting to see how it progresses.”
In April, the Senate passed a joint resolution under its Congressional Review Act authority disapproving of the CFPB’s March 2013 auto lending bulletin that addressed discrimination in indirect auto finance transactions. The House followed suit, and on May 21 President Donald Trump signed it into law.