CBA Comment Letter re RFI on the Equal Credit Opportunity Act and Regulation B

To Whom It May Concern:


The Consumer Bankers Association (“CBA” or “the Association”) appreciates the opportunity to offer comments in response to the Consumer Financial Protection Bureau’s (“CFPB” or “the Bureau” or “the agency”) Request for Information on the Equal Credit Opportunity Act and Regulation B (“the RFI”).  We commend the Bureau for soliciting feedback on the Equal Credit Opportunity Act (“the ECOA”) and its implementing Regulation B, and providing a platform to openly discuss efforts to prevent credit discrimination, encourage responsible innovation, promote fair, equitable and nondiscriminatory access to credit, address potential regulatory uncertainty, and develop viable solutions to regulatory compliance challenges.


CBA and our member institutions sharply condemn racism and discriminatory treatment of any kind.  Following a year that bore witness to tragic events and transformative discussions about racial inequities, CBA embraces this pivotal chapter in our nation’s history to reaffirm our members’ collective, ongoing, and sustained efforts to ensure consumers have access to a fair and responsible banking system.  Our members are vigilant and passionate in their efforts to promote equal opportunity, combat discrimination and explore innovative ways to improve access to credit.  Through this RFI response, we are pleased to offer our views on how the Bureau can best ensure the ECOA framework endures as an adaptive and effective pillar of fair lending in a modern, technology-driven banking system.


In addition to our comments on the specific questions posed by the RFI, we believe any future ECOA reforms must reflect the following core principles:


  • The ECOA and Regulation B framework must be flexible to encourage and allow institutions to meet consumer demand and expand access to credit using innovation.
  • The CFPB must ensure an even playing field between banks and non-bank participants within its jurisdiction by ensuring non-bank participants are subject to the same rigorous model governance and ECOA requirements as banks.
  • The CFPB should coordinate with other banking regulators to harmonize inconsistent interpretations or supervisory expectations and develop interagency fair lending guidance where possible.
  • Reforms to the ECOA and Regulation B framework should be addressed holistically with related laws such as unfair, deceptive, or abusive acts and practices (“UDAAP”) and the Fair Credit Reporting Act (“FCRA”) to ensure regulatory gaps are neither created nor exacerbated.


I.  Disparate Impact


Should the Bureau provide additional clarity regarding its approach to disparate impact analysis under ECOA and/or Regulation B?

In 2015, the United States Supreme Court decided Texas Department of Housing and Community Affairs v. Inclusive Communities Project and held disparate impact claims are cognizable under the specific, results-oriented language of the Fair Housing Act (“FHA”).  The Inclusive Communities decision also identified five constitutional safeguards for disparate impact liability but did not address the question of whether disparate impact claims are cognizable under the ECOA.  Since Inclusive Communities was decided, some debate persists about the legal test parties should use to analyze disparate impact liability under the FHA and whether a similar disparate impact analysis applies to the ECOA.


In the 90 days since this RFI was published in the Federal Register, the Department of Housing and Urban Development (“HUD”) attempted to finalize a rule to align its 2013 disparate impact rule with the Supreme Court’s 2015 ruling in Inclusive Communities (“the 2020 final rule”).   On October 25, 2020, only one day before the 2020 final rule was to become effective, the U.S. District Court for the District of Massachusetts issued a stay and a preliminary injunction to prevent HUD from implementing the rule.  Thus, even in the context of the FHA, where the United States Supreme Court has expressly ruled the FHA supports disparate impact liability, the legal test for analyzing potential disparate impact may be subject to further change.