WASHINGTON—The Consumer Financial Protection Bureau appears to be moving toward finalizing a controversial fair-lending rule that would narrow longstanding anti-discrimination requirements for lenders, with a government website showing the proposal is now under review at the Office of Management and Budget and marked for “no material change” from the version unveiled in November, according to Reuters.
As Reuters reported, the proposal would scale back how the CFPB enforces the Equal Credit Opportunity Act by dropping the long-used “disparate impact” standard—under which lenders can be held accountable for policies that disproportionately harm women or minorities even without explicit intent—and instead focus only on overtly discriminatory conduct.
Reuters said the move aligns with an executive order President Donald Trump issued last year arguing that disparate-impact standards encourage favoritism and impose unfair burdens on companies, while representatives for both the CFPB and OMB did not immediately respond to requests for comment.
Reuters also noted the proposal faces opposition from fair-lending and consumer advocates, who argue it conflicts with congressional intent behind the 1974 Equal Credit Opportunity Act and later reforms, while industry groups have backed the change as a way to reduce compliance burdens and legal exposure for banks and other lenders.