The Consumer Financial Protection Bureau (CFPB) announced that it will use all available legal avenues, including disparate impact, to pursue lenders who allegedly discriminate against consumers. The CFPB also compiled tips and warning signs to help consumers identify and avoid credit discrimination. In a Compliance Bulletin, which applies to all institutions under the Bureau’s jurisdiction and applies to credit products including overdraft protection programs, mortgages, credit cards, student loans, and auto loans, the CFPB recognized the applicability of the disparate impact doctrine to prove discrimination under the Equal Credit Opportunity Act.
While we disagree with this conclusion relating to disparate impact, we are not surprised. This follows closely on the heels of public statements from Assistant Attorney General Tom Perez, who heads up the Civil Rights Division of the Department of Justice.
In an op/ed in American Banker yesterday, Mark Olson, former Federal Reserve Board governor, characterized recent actions by the CFPB as a venture into “vigilante territory,” likening them to “frontier justice.”