OCC drops disparate impact enforcement

The Office of the Comptroller of the Currency (OCC) announced Monday that it will no longer enforce disparate impact analysis in fair lending risk assessments, following a directive from the White House issued three months ago.

“Consistent with EO 14281, the OCC supervisory process for fair lending compliance no longer includes examining for disparate impact liability,” James M. Gallagher, senior deputy comptroller for the Office of the Chief National Bank Examiner, wrote in a statement.

In April, President Donald Trump signed an executive order directing federal agencies to eliminate the use of disparate impact in enforcement or supervision. Disparate impact refers to policies or practices that appear neutral but disproportionately and unintentionally affect protected groups, even without discriminatory intent.

The Consumer Financial Protection Bureau (CFPB) revised its guidelines in April to reflect the executive order. The agency said it would not “engage in or facilitate unconstitutional racial classification or discrimination,” including redlining or bias claims based solely on statistical analysis. It would instead focus on matters involving actual intentional discrimination with identifiable victims.
In line with this approach, the OCC said its examiners will no longer pursue issues related to a bank’s disparate impact risk, including internal assessments or related procedures.

But the OCC emphasized that it will continue conducting regular fair lending risk assessments by analyzing Home Mortgage Disclosure Act (HMDA) data for potential evidence of disparate treatment. It also said it will conduct risk-based fair lending examinations and take action when there is evidence of intentional discrimination.