The United States Supreme Court has upheld the disparate-impact theory of discrimination, which holds a defendant liable for neutral practices that have a disparate impact on protected classes even where there is no intent to discriminate.
While CBAI disagrees with the Supreme Court’s interpretation of the Fair Housing Act, we do appreciate the high court’s limited application of the theory and its direction to lower courts to act promptly and “examine with care” plaintiff cases. The majority opinion made it clear that a disparate-impact case cannot rely on statistics alone and that the accuser must also cite the specific policy that caused the disparate result. According to the ruling, defendants have a good defense against disparate-impact claims if they have a legitimate public interest or business reason for their policies. The burden then shifts to the plaintiff to show there was a less discriminatory alternative that would achieve the same goal.
Community banks are fully committed to fair lending and have strong compliance systems in place, though the court’s ruling will likely promote litigation that can itself cause reputational damage. CBAI will work with the Independent Community Bankers of America and Congress to advance legislation to ensure that federal laws truly support fair and equitable mortgage lending for consumers and community banks alike. Read Supreme Court Ruling.