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ARTICLE · 30 APRIL 2025

White House Executive Order Eliminates Disparate-Impact Liability Enforcement

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On April 23, the White House issued an Executive Order entitled Restoring Equality of Opportunity and Meritocracy, directing federal agencies to "eliminate the use of disparate-impact liability...

United StatesFinance and Banking
A.J. Dhaliwal
A.J. Dhaliwal
Mehul Madia
Mehul Madia
Beineng Zhang
Beineng Zhang
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On April 23, the White House issued an Executive Order entitled Restoring Equality of Opportunity and Meritocracy, directing federal agencies to "eliminate the use of disparate-impact liability in all contexts to the maximum degree possible." The Executive Order marks a potential shift in how federal fair lending laws will be enforced across the financial services sector.

Federal agencies have historically used disparate-impact liability to evaluate facially neutral policies that may result in unequal outcomes for protected classes. The Executive Order now instructs agencies to reassess their enforcement strategies and deprioritize claims rooted in disparate impact, including under the Equal Credit Opportunity Act, the Fair Housing Act, and other fair lending statutes.

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