WASHINGTON (4/19/12)--The Consumer Financial Protection Bureau (CFPB) will "combat unlawful, discriminatory practices--including those that have an illegal disparate impact on protected borrowers," and examine mortgage lending, student lending, auto lending, and credit card practices for evidence of lending discrimination, the agency said on Wednesday.
The CFPB in its bulletin 2012-04 said it would continue to adhere to the fair lending principles outlined in Regulation B, which implements the Equal Credit Opportunity Act (ECOA). ECOA bans creditors from discriminating against credit applicants based on their race, color, religion, national origin, sex, marital status, and other select factors.
In the bulletin, the CFPB said it would employ the legal doctrine of "disparate impact" as it exercises its supervision and enforcement authority to enforce compliance with the ECOA and Reg B.
According to the CFPB, lending policies that seem evenhanded but have a disproportionate, negative effect on a group that is protected under ECOA are said to have a "disparate impact," and "are unlawful unless they meet a legitimate business need that can't be met by an alternative that has a less disparate impact."
"Discrimination that disparately impacts borrowers in violation of the law hurts consumers and can threaten the economic stability of our communities," and "that is why the law has long recognized this form of unlawful credit discrimination," the CFPB said.
For the CFPB release, use the resource link.