The ABA has issued a fair lending white paper to Treasury entitled: Fair Lending: Fighting Illegal Discrimination: Promoting Growth for the Whole Community.
The paper raises issues with regard to agency regulation and enforcement efforts generally but, more specifically, focuses on the CFPB. It addresses enforcement of redlining, application of disparate impact, and advocates that the CFPB should be kept out of business lending.
With regard to redlining, the ABA urges the agencies that the Community Reinvestment Act (CRA) obligations have to be considered in a redlining evaluation and, specifically, challenges the concept of the REMA (Reasonably Expected Market Area). There is often a tension between redlining and CRA with respect to compliance and examinations.
The ABA also challenges the application of the enforcement of disparate impact in light of the Supreme Court’s rulings and argues that, in general, disparate impact does not apply to ECOA.
In terms of small business lending, the ABA specifically objects to collection of HMDA-like data for CRA reportable loans (which is intended by the Bureau) as well as the CFPB capabilities and responsibility for business lending oversight.
The specific points are as follows:
- Under the Fair Housing Act, Agencies should apply disparate impact consistent with the Supreme Court’s framework.
- Disparate impact does not apply under the Equal Credit Opportunity Act.
- Redlining should be assessed consistent with CRA.
- Purchased loans should be recognized as promoting access to credit.
- Keep the Bureau’s focus on consumers, not business.
The paper offers a number of recommendations to address the issues raised, including repealing aspects of Dodd-Frank.
The full text of the paper can be found here: