Seven Agencies Rescind 2022 Statement on Race-Based Lending Programs

Seven agencies rescinded the 2022 Interagency Statement on Special Purpose Credit Programs Under the Equal Credit Opportunity Act and Regulation B.

The FDIC, OCC, CFPB, DOJ, National Credit Union Administration, Department of Housing and Urban Development ("HUD"), and Federal Housing Finance Agency said in a notice that creditors should not rely on the statement or other related issuances going forward.

The agencies explained that the 2022 statement relied on an earlier version of Regulation B that permitted creditors to structure lending programs based on race, color, national origin, or sex under certain conditions. That provision has since been amended, and the agencies said the prior interpretation could not be reconciled with the statutory text of the Equal Credit Opportunity Act ("ECOA") and the Fair Housing Act ("FHA"), which expressly prohibit discrimination based on protected characteristics.

The notice cited the Supreme Court's decision in Students for Fair Admissions v. Harvard for the proposition that race-based policies are subject to heightened scrutiny and that a general desire to remedy societal discrimination does not satisfy that standard. The agencies also noted that HUD and the CFPB had already withdrawn related sub-regulatory guidance, including a 2021 HUD statement on special purpose credit programs ("SPCPs") and a 2020 CFPB advisory opinion on the same topic.

The seven agencies stated that all SPCPs must comply with ECOA, Regulation B, and the FHA. They added that "federal law does not authorize any generalized remedial 'equity' initiatives absent specific cases of unlawful discrimination" and that creditors should not rely on previous guidance suggesting otherwise.