By Thomas G. Wolfe, J.D.
In a letter to Consumer Financial Protection Bureau Acting Director Mick Mulvaney, a coalition of 14 state attorneys general expresses its “grave concerns” about statements that Mulvaney has reportedly made suggesting that the CFPB is “no longer allowed” to enforce the Equal Credit Opportunity Act’s prohibition against “disparate impact discrimination with regards to auto lending.” Underscoring the fact that state AGs share authority with the CFPB to enforce the Bureau’s regulations interpreting ECOA, and that many states have antidiscrimination statutes modeled on ECOA, the coalition urges the CFPB to reexamine its stance and recognize that ECOA “provides for disparate impact liability.” Moreover, in their Sept. 5, 2018, letter, the state AGs assert that they “will not hesitate to uphold the law” if the CFPB were to act in a manner deemed contrary to federal precedent, or if the Bureau fails to fulfill its “Congressional charge to ensure nondiscriminatory lending to the residents of our states.”
The coalition’s letter to Mulvaney is signed by the AGs from California, District of Columbia, Illinois, Maine, Maryland, Massachusetts, Minnesota, New Jersey, New York, North Carolina, Oregon, Rhode Island, Vermont, and Virginia.
Coalition’s letter. As observed by the coalition in its letter to the CFPB, the “disparate impact” theory of liability in the credit discrimination area declares that “practices, procedures, or tests neutral on their face, and even neutral in terms of intent, cannot be maintained if they operate to ‘freeze’ the status quo of prior discrimination.” The state AGs point out that they have “regularly relied on disparate impact theories in recent years to combat lending discrimination and ensure greater equality of opportunity.”
Moreover, the letter maintains that there are “no substantive grounds” for the CFPB to reconsider the federal government’s “more than 40 years of consistent interpretation that ECOA provides for disparate impact liability.” Referencing the U.S. Supreme Court’s 2015 ruling in Texas Department of Housing & Community Affairs v. Inclusive Communities Project, Inc., which found that the Fair Housing Act provided for disparate impact liability, the coalition notes that the operative wording of the applicable FHA provision is identical to the pertinent text of ECOA. According to the state AGs, the Court’s decision “dictates that the text of ECOA unambiguously provides for disparate impact liability.”
Statements by AGs. In their respective press releases pertaining to the coalition’s letter to Mulvaney, various state AGs offered statements as well. For instance, California Attorney General Xavier Becerra stressed that “[f]ighting systemic and structural inequality requires strong consumer protections.” According to Becerra, “[b]y weakening protections against credit discrimination, the Trump Administration threatens to undermine American equality and prosperity.” Similarly, New York Attorney General Barbara Underwood remarked that ECOA “was enacted because of our country’s sordid history of credit discrimination—and it’s unbelievable that the CFPB is considering refusing to use it to protect consumers.” Both Becerra and Underwood stated that they would continue combating credit discrimination and unfair lending practices through their respective state offices.
North Carolina Attorney General Josh Stein stated that, along with “the 13 other attorneys general in this coalition, I will continue to stand up for people so their lives aren’t damaged by credit discrimination. I urge the CFPB to fulfill its legal obligation to uphold nondiscriminatory lending practices.” Likewise, Rhode Island Attorney General Peter Kilmartin commented, “It is alarming that CFPB Director Mulvaney has indicated the agency is considering rolling back its responsibility to enforce nondiscriminatory lending requirements under the Equal Credit Opportunity Act, and this appears to be another effort to undermine the power and authority of the CFPB in protecting consumers.”
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