(Sept. 17, 2021) Existing laws and regulations provide credit unions, banks and other supervised entities regulatory flexibility to take certain actions that can benefit consumers in communities under stress from disasters or emergencies and hasten recovery, CFPB said in policy guidance issued this week.
In a “statement on supervisory practices regarding financial institutions and consumers affected by a major disaster or emergency,” the bureau said it would consider the impact of major disasters or emergencies on supervised entities themselves when conducting supervisory activities.
“Supervised entities can make use of existing regulatory flexibility where doing so would benefit consumers affected by a major disaster or emergency,” the bureau wrote in the statement.
The statement offers examples of flexibility under Regulations B (implementing the Equal Credit Opportunity Act, ECOA), X (Real Estate Settlement Procedures Act, RESPA), and Z (Truth in Lending Act, TILA).
On supervisory response, the CFPB said it recognizes that supervised entities “may themselves experience difficulties due to a major disaster or emergency.” The bureau said that, when conducting exams or other supervisory activities, it would consider the circumstances institutions may face following a major disaster or emergency “and will be sensitive to good-faith efforts to assist consumers.”
Separately this week, NCUA joined with the federal banking agencies in issuing an interagency statement on supervisory practices regarding credit unions and banks affected by Hurricane Ida. The statement, relatively routine for the agencies in the wake of a storm or other natural disaster, noted regulators “recognize the serious impact of Hurricane Ida on the customers and operations of many financial institutions and will provide appropriate regulatory assistance to affected institutions subject to their supervision.”
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(June 4, 2021) Credit unions should ensure their policies, procedures, and training materials promote compliance with federal equal credit opportunity laws, and Regulation B administered by the CFPB, in line with a 2020 U.S. Supreme Court ruling, NCUA said this week.
In a Regulatory Alert (21-RA-07), NCUA noted that the March 16, 2021 interpretive ruling published by CFPB clarified the prohibition against sex discrimination in the Equal Credit Opportunity Act (ECOA). The alert stated that the act and the rule encompass discrimination based on sexual orientation and gender identity discrimination. “The interpretive rule also covers discrimination based on actual or perceived nonconformity with sex- or gender-based stereotypes, and discrimination based on an applicant’s associations,” the alert states.
It notes that the law and rule cover discrimination against individuals, not merely groups. The alert also states that sex discrimination “includes discrimination motivated by actual or perceived nonconformity with sex- or gender-based stereotypes, such as discrimination based on a lender’s perception that a customer’s attire does not accord with the customer’s perceived gender.”
The rule is consistent, the agency said, with the 2020 high court ruling in Bostock v. Clayton County, Ga. That ruling held that the prohibition against sex discrimination in Title VII of the Civil Rights Act of 1964 encompasses sexual orientation discrimination and gender identity discrimination.
“Some state laws already prohibit discrimination in credit transactions based on sexual orientation or gender identity,” the alert notes. “Credit unions should ensure their policies, procedures, and training materials promote compliance with ECOA and Regulation B consistent with the interpretive rule. Credit unions should also review automated scoring, decisioning, and pricing models for variables that could be proxies for these prohibited bases.”
NASCUS will develop a (members only) summary of the alert.
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NCUA Reg Alert: Equal Credit Opportunity Act (Regulation B)
(March 12, 2021) Sexual orientation discrimination and gender identity discrimination is prohibited under equal credit opportunity regulations, CFPB said this week in an interpretive rule. Further, the subhead for the press release issued by the agency announcing the rule read that the financial industry “is on notice that Bureau will not tolerate illegal discrimination against the LGBTQ+ community.”
CFPB Acting Director Dave Uejio said the interpretive rule is intended to clarify prohibitions under regulations implementing the Equal Credit Opportunity Act (ECOA). Uejio asserted that the action is to make clear that lenders cannot discriminate based on sexual orientation or gender identity. The bureau said discrimination includes that based on actual or perceived nonconformity with traditional sex- or gender-based stereotypes, and discrimination based on an applicant’s social or other associations.
“The CFPB will ensure that consumers are protected against such discrimination and provided equal opportunities in credit,” Uejio said in the release. The agency also indicated that it would take enforcement actions under the ECOA “to hold financial institutions accountable for their actions that violate ECOA.”
The bureau stated that in 2016 it held that the law supports arguments that the prohibition against sex discrimination also affords broad protection from discrimination based on an applicant’s sexual orientation and gender identity under ECOA (which implements the bureau’s Regulation B).
It also asserted that a Supreme Court decision last year (Bostock v. Clayton County, Georgia) held that the prohibition against sex discrimination in Title VII of the Civil Rights Act of 1964 encompasses sexual orientation discrimination and gender identity discrimination. On top of that, the agency said, a request for information (RFI) it issued last summer to solicit public comments and information to identify opportunities to prevent credit discrimination and encourage responsible innovation under ECOA and Regulation B (including how Bostock should be interpreted) supports the agency’s action this week.