Attorneys Generals Urge CFPB to Enforce Equal Credit Opportunity Act
Inside Subprime: Sept 6, 2018
By Jessica Easto
On September 5, 14 Attorneys General sent a letter to Mick Mulvaney, the acting director of the Consumer Financial Protection Bureau (CFPB), urging him to enforce the Equal Credit Opportunity Act (ECOA) and refrain from “reexamining” its requirements.
The ECOA protects consumers against credit discrimination on the basis of race, color, religion, national origin, sex, marital status, and age. It is the federal government’s primary antidiscrimination law, covering all forms of credit except for mortgage lending.
The attorneys general were acting in response to a May CFPB statement regarding S.J Res. 57, a joint resolution passed by the Senate in April that disapproves CFPB guidance regarding “indirect auto lending compliance” with the ECOA. The resolution rejected the interpretation of the ECOA that provides for disparate impact liability
Disparate impact is often referred to as “unintentional discrimination.” A creditor may not mention the protected status of a customer, but their unconscious bias may still have a “discriminatory effect” on the customer. The ECOA, as the attorneys general pointed out in their letter, has historically and continuously been interpreted to prohibited this, along with outright discrimination.
“Given a recent Supreme Court decision distinguishing between antidiscrimination statutes that refer to the consequences of actions and those that refer only to the intent of the actor,” reads the CFPB statement, “and in light of the fact that the Bureau is required by statute to enforce federal consumer financial laws consistently, the Bureau will be reexamining the requirements of the ECOA.”
The attorneys general enforce regulations along with the CFPB and spearhead antidiscrimination efforts in their respective states.
“The Equal Credit Opportunity Act 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,” said New York attorney general Barbara Underwood. “As we’ve shown, my office won’t hesitate to uphold the law and protect those we serve, even if the CFPB won’t.”
Attorneys general of North Carolina, California, Illinois, Maine, Maryland, Massachusetts, Minnesota, New Jersey, New York, Oregon, Rhode Island, Vermont, Virginia, and the District of Columbia signed the letter.
They say they “will not hesitate to uphold the law if CFPB acts in a manner contrary to law with respect to interpreting ECOA.”
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