CFPB Finalizes Rule Narrowing Fair Lending Regulations

On April 22, the Consumer Financial Protection Bureau (CFPB) published a final rule (Rule) amending Regulation B that materially narrows the scope of fair lending liability under the Equal Credit Opportunity Act (ECOA). The Rule makes three primary changes: (1) establishing that disparate-impact liability, referred to as the "effects test," is not cognizable under ECOA; (2) limiting the scope of prohibited "discouragement" under Regulation B; and (3) prohibiting or restricting the ability of special purpose credit programs (SPCP) to target customers on the basis of specific characteristics, such as race, sex, or religion. The CFPB’s Rule largely implements the proposed rule issued last November. To read more about the proposed rule, read Steptoe’s client alert here.