Banking and Finance Law Daily Wrap Up, EQUAL CREDIT OPPORTUNITY—ABA supports CFPB’s fair lending plan; Better Markets objects to it, (Dec 16, 2025)

By Nora Macaluso

The Bureau has proposed amending provisions on disparate impact, discouragement of applicants or prospective applicants, and special-purpose credit programs.

The American Bankers Association issued a letter in support of proposed Consumer Financial Protection Bureau changes on Equal Credit Opportunity Act (ECOA) enforcement. Better Markets, meanwhile, said the plan would “gut” the law.

The CFPB sought comment on the proposal, which would amend sections of Regulation B and its commentary to remove disparate impact from its enforcement with ECOA, amend a provision on discouraging prospective applicants, and establish new limits on lenders’ special-purpose credit programs (see Banking and Finance Law Daily, Nov. 12, 2025).

The proposal followed an executive order from President Trump directing agencies to “eliminate the use of disparate-impact liability in all contexts to the maximum degree possible.”

The ABA said it supports all three of the CFPB’s proposed changes, saying they would “advance the purposes of the ECOA, encourage prudent, risk-based underwriting, and discourage arbitrary government enforcement.”

“ABA agrees that disparate impact is not a cognizable theory of liability under ECOA, and we support the Bureau’s proposed changes to the antidiscrimination provisions of Regulation B and its commentary to appropriately implement ECOA, including the addition of language affirmatively stating that ECOA does not recognize the ‘effects test,’” the group said in a comment letter.

The ABA did recommend that the Bureau remove the phrase “should know” from its proposed amendment to the regulation’s discouragement prohibition “to eliminate any potential liability for statements that the creditor does not know would discourage an applicant or prospective applicant from applying for credit.” The preamble to the proposed rule recognizes that ECOA prohibits intentional discrimination, the group noted.

The amendments to the provisions on special purpose credit programs “provide important regulatory clarity while maintaining flexibility for for-profit lenders seeking to meet ‘special social needs’ in their communities,” the ABA said. However, the group requested that mandatory compliance dates be extended to give its members time to review their existing programs and take steps to ensure new ones are developed in line with the amended provisions.

Better Markets, in a comment letter of its own, urged the Bureau to rethink the proposal “to provide a chance for more meaningful stakeholder feedback.”

The proposal as written “would upend 50 years of law, regulation and court precedent while also causing harm to credit creation, wealth building and economic growth, with particular harm caused to traditionally underserved communities,” Better Markets said. It also “suffers from severe infirmities, including the lack of data or evidence to support the proposed amendments and a lack of consultation with other state and federal agencies tasked with enforcing ECOA,” the group said.

Better Markets cited research on the 2008 global financial crisis as evidence for retaining the current law. Black and Hispanic families were more likely to be denied loans or be given subprime loans than white families earning less, the group said. Lenders, they said, often used “proxies for race” as reasons to target borrowers for high-cost loans. “The fact that this occurred so recently and at such scale underscores the enduring need for ECOA and its enforcement,” the letter said.

As for disparate impact, “the Bureau clings to unsupported judgements about how it posits the Supreme Court may interpret” an action, Better Markets said. “The Bureau’s only supporting justification appears to be their own tortured and novel reading of the Act and hypothetical Supreme Court opinions that they imagine may one day be decided.”

The CFPB’s proposal on special purpose credit programs relies on “sweeping comments made unsupported by evidence” that “clearly do not satisfy the rigorous standards required for rulemaking under the Administrative Procedure Act,” Better Markets said.

The ECOA “has been on the books for 50 years as a response to the widespread denial of credit to underserved markets, particularly Black and Hispanic borrowers and women,” said Better Markets COO and Policy Director Amanda Fischer. “The Trump Administration’s proposal would narrow the instances that qualify as discrimination, make it easier to exclude certain borrowers from applying for loans, and end programs designed to make credit more accessible.”

Companies: American Bankers Association; Better Markets

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