Consumer Finance Insights
August 12, 2015

American Bankers Association Asks Financial Regulators to Adopt Supreme Court’s Disparate Impact Framework


On August 5, 2010, the American Bankers Association (ABA) announced that it had sent a letter to federal regulators and enforcement agencies, requesting that they confirm in their “interagency guidance, updated exam procedures, and where appropriate amended regulations” that the burden-shifting framework used by the Supreme Court in Texas Department of Housing and Community Affairs v. Inclusive Communities Project, Inc.​, No. 13-1371 (U.S. June 25, 2015), will be used by agencies and regulators in considering disparate impact discriminatory lending claims for both supervisory and enforcement purposes.  The letter praised the Court’s decision, noting that it “will ensure that establishing a disparate impact claim must meet an appropriately high standard.”  The letter specifically requested that the agencies and regulators adopt the following standards used by the Supreme Court in assessing a disparate impact claim:  (1) A statistical imbalance is not enough to establish a prima facie case; (2) a plaintiff must satisfy a ‘robust causality requirement’ between a specific policy or practice and the statistical disparity; (3) a valid business or policy purpose rebuts a prima facie case; and (4) a plaintiff must demonstrate an ‘available alternative . . . practice that has less disparate impact and serves the [entity’s] legitimate needs’ before rejection a business justification for a challenged practice can be rejected.