The Consumer Financial Protection Bureau (CFPB) is expected to finalise new regulations proposed last November that would narrow key anti-discrimination requirements for lenders. According to a government website, the policy revision would alter civil-rights-era rules.
The new regulation would free banks and other financial institutions from a long-standing requirement to prevent discriminatory impacts on women and minorities. Instead, it would focus solely on preventing explicitly discriminatory conduct. The change follows an executive order issued a year ago, which argued that requiring companies to prevent ‘disparate impact’ encourages favoritism and unfairly burdens businesses.
The Office of Management and Budget (OMB) website indicated that a final version of the regulation is under review, showing ‘no material change’ from November’s proposed version. It remains unclear when the CFPB will adopt the new rule or if OMB experts will recommend any changes.
Fair-lending and pro-consumer advocates object to the rule change, arguing it contradicts the intent of the 1974 Equal Credit Opportunity Act. Industry groups support the proposal, stating it would free banks from unnecessary compliance burdens and legal liabilities.
