The FDIC announced that it will evaluate potential discrimination under the Equal Credit Opportunity Act and Fair Housing Act only through evidence of disparate treatment.
Exam Manual Update: The FDIC said several sections of the Consumer Compliance Examination Manual have been updated to remove all references to disparate impact and how to evaluate disparate impact risk.
About Disparate Impact: A bank may violate fair lending laws by creating a disparate impact when a neutral policy or practice results in disproportionate burdens on or illegally excludes a protected class.
OCC Action: The OCC in July announced that it removed references for disparate impact liability from the “Fair Lending” booklet of the Comptroller’s Handbook, started removing references in other materials, and instructed examiners that they should no longer examine for disparate impact.
ICBA Advocacy: ICBA strongly supports equal access to credit while consistently supporting amending fair lending laws to clarify that disparate impact without a finding of intentional discrimination does not violate fair lending.
ICBA in May strongly encouraged HUD Secretary Scott Turner to revisit the 2013 Disparate Impact Rule to ensure fair enforcement of the Fair Housing Act, reduce regulatory burdens on community banks, and promote a merit-based approach to housing policy.
A 2024 ICBA white paper provides an in-depth look at trends in fair lending and explores concepts such as disparate impact.
What It Means for Community Bankers: Although the agencies won't be prioritizing disparate impact, it's still a cognizable claim, so banks should retain policies that mitigate disparate impact.