Letter to the CFPB on the Notice of Proposed Rulemaking to Amend the Equal Credit Opportunity Act (Regulation B)

Dear Acting Director Vought,

The American Bankers Association (ABA) appreciates the opportunity to comment on the Consumer Financial Protection Bureau’s (CFPB or Bureau) proposed rule to revise Regulation B, which implements the Equal Credit Opportunity Act (ECOA). ABA members are committed to nondiscriminatory lending, and the ABA supports a durable regulatory framework, grounded in the text of ECOA, that will reinforce ECOA’s antidiscrimination principles while minimizing regulatory ambiguity and uncertainty. Such a framework will advance the purposes of the ECOA, encourage prudent, risk-based underwriting, and discourage arbitrary government enforcement.

To support these goals, ABA recommends that the CFPB (1) finalize the proposal recognizing that disparate impact liability is not cognizable under ECOA; (2) finalize the proposal regarding prohibited discouragement, subject to the clarification that such liability only extends to intentional conduct; and (3) finalize the proposed amendments to the special purpose credit program (SPCP) provisions.

I. ABA Supports Amending Regulation B to Clarify That Disparate Impact Claims are not Cognizable Under ECOA.

The Bureau has proposed to amend sections of Regulation B and its commentary to (i) remove references to the "effects test," and (ii) clarify that ECOA "does not provide for the prohibition of practices that are facially neutral as to prohibited bases, except to the extent that facially neutral criteria function as proxies for protected characteristics designed or applied with the intention” of discriminating against protected class members." The Bureau seeks input regarding the proposed amendments, as well as certain preliminary determinations that inform the Bureau’s proposal. As set forth in this section, ABA supports the Bureau’s proposal and agrees that disparate impact theory should not be available to establish liability under ECOA.

Download the comment letter to read the full text.