The American Bankers Association has sent a letter to the DOJ, Fed, OCC, FDIC, HUD and CFPB requesting confirmation “in interagency guidance, updated exam procedures, and where appropriate amended regulations that the Agencies’ consideration of disparate impact claims in both the supervisory and enforcement context will be governed by standards consistent with the [Supreme] Court’s framework [in Inclusive Communities.]” The ABA also urges HUD to review and re-propose its FHA rule to incorporate the Inclusive Communities framework.
In Inclusive Communities, a sharply divided U.S. Supreme Court held that disparate impact claims are cognizable under the FHA but described a framework containing limitations on disparate impact liability that “are necessary to protect potential defendants against abusive disparate impact claims.” The decision did not resolve the question of whether disparate impact claims are cognizable under the ECOA.
Although the CFPB is one of the agencies to whom the ABA’s letter was sent, the CFPB does not have FHA enforcement authority. However, in its ECOA examination procedures, the CFPB notes, that “[i]n addition to potential ECOA violations, [a CFPB] examiner may identify potential violations of the [FHA] through the course of an examination. … The CFPB cooperates with [HUD] to further the purposes of the [FHA]. If a potential [FHA] violation is identified, the examiner must consult with [CFPB] Headquarters to determine whether a referral to HUD or [DOJ] and, if applicable, the creditor’s prudential regulator is appropriate.”
In the letter, the ABA also urges the agencies “to address on an interagency basis standards for referrals to DOJ consistent with the [Supreme] Court’s framework.” According to the ABA, “there should be consensus and transparency regarding what constitutes a ‘pattern or practice’ of discrimination based on a theory of disparate impact liability, consistent with the decision of the Court, that warrants a referral from one of the banking agencies or HUD to DOJ. Moreover, the standards should require facts establishing a prima facie case as a predicate to referral.”