On December 12, a coalition of 21 attorneys general penned a joint letter responding to the CFPB’s NPRM proposing amendments to Regulation B and urging the Bureau not to move forward with the proposed changes to its disparate impact liability and discouragement provisions. As previously covered by InfoBytes, the CFPB published its proposed rule amending Regulation B by eliminating regulatory provisions supporting disparate impact liability, narrowing what would constitute “discouragement,” and changing the for-profit entity requirements for “special purpose credit programs.” The attorneys general argued that these proposed changes violated the APA and would weaken the ECOA’s protections against unfair treatment in credit markets.

The letter outlined several reasons for rejecting the NPRM’s changes to disparate impact liability. First, the attorneys general maintained that a proper reading of the ECOA compels the conclusion that the statute “authorizes a disparate impact theory of liability.” Second, they asserted that the NPRM “erroneously” assumes that consumers would still enjoy broad anti-discrimination protections if disparate impact liability is removed. Third, they argued that disparate impact liability is a lawful and established mechanism for enforcing anti-discrimination statutes.

Regarding the NPRM’s proposed amendments to the discouragement provisions, the attorneys general contended that these changes are contrary to law, would harm consumers, and would undermine state enforcement efforts. They further criticized the CFPB for relying on speculation rather than evidence to justify the revisions, calling such reasoning arbitrary and capricious under the APA. The attorneys general asked the Bureau to “recognize the harm” from this proposal and forego these changes to Regulation B.