The CFPB, together with the Solicitor General, has submitted an amicus brief in Hawkins v. Community Bank of Raymore, the case in which the question before the U.S. Supreme Court is whether the Equal Credit Opportunity Act (ECOA) applies to loan guarantors. The Court agreed to hear the case in March 2015 and is expected to hear oral argument in the Court’s term that begins in October 2015.
The Supreme Court will be reviewing the decision of the U.S. Court of Appeals for the Eighth Circuit which affirmed the district court’s ruling that the ECOA did not provide a cause of action to the plaintiffs who alleged that they were required to sign guaranties of several loans made by the bank to a company their husbands controlled. The plaintiffs claimed that by requiring the guaranties, the bank violated the ECOA provision that prohibits discrimination by a creditor against an “applicant” on the basis of marital status. The Eighth Circuit ruled that Regulation B’s definition of “applicant,” which includes a guarantor, was not entitled to deference because it contradicted the ECOA’s unambiguous text.
The CFPB has rulemaking and enforcement authority under the ECOA. In its amicus brief, the CFPB argues that the Regulation B definition is entitled to “great deference” under Chevron U.S.A. Inc. v. NRDC, Inc. According to the CFPB, deference is “especially appropriate” because Congress has repeatedly amended the [ECOA] without disturbing the [Federal Reserve] Board’s longstanding interpretation of ‘applicant.’” It further argues that Regulation B’s definition of “applicant” is consistent with the ECOA’s text and serves the ECOA’s purposes by protecting spouses who are asked to sign guarantees based solely on marital status from discriminatory harm.