On February 25, a group of Democratic senators issued a letter urging the OCC, FDIC, and NCUA to reinstate references to disparate impact liability in their respective organizations’ supervisory guidance. The letter argued that disparate impact analysis is essential for uncovering discriminatory lending practices that may appear neutral but disproportionately harm certain groups, with the senators highlighting decades of alleged discriminatory practices such as redlining and denial of services in minority neighborhoods, along with past legislative efforts to address these issues.

The lawmakers criticized the agencies’ removal of disparate impact language from examination manuals following an April 2025 executive order aiming to eliminate the use of such liability to the extent possible (covered by InfoBytes here). They argued that eliminating disparate impact analysis significantly weakens civil rights safeguards under statutes such as the ECOA and makes it easier for financial institutions to discriminate against borrowers on protected characteristics including race and gender. The letter further contended that removing references to disparate impact could hinder examiners’ ability to identify disparities in mortgage lending, credit cards, auto financing, and other consumer financial products. The letter concluded by urging the heads of the agencies to reinstate references to disparate impact liability and provide a briefing on efforts to restore disparate impact references by March 11.