Order Threatens to Widen Racial Wealth Gap
WASHINGTON – This week, President Trump attempted to rewrite settled Supreme Court precedent to make it easier for lenders and others to discriminate without fear of prosecution. The order calls for federal agencies, including the U.S. Department of Housing and Urban Development (HUD) and the Consumer Financial Protection Bureau (CFPB), to stop using data to identify discriminatory policies and practices that disproportionately harm certain groups, known as “disparate impact.” Instead, the government will only address illegal discrimination in the rare instances when the bad actor is caught red-handed.
“Disparate impact liability is a bedrock principle in ensuring fair and equal access to safe housing and affordable credit. Eliminating this standard in the federal agencies is a continuation of the Trump Administration’s all-out assault on equity, civil rights, racial justice, and the rule of law,” said Odette Williamson, senior attorney at the National Consumer Law Center and director of NCLC’s Racial Justice and Equal Opportunity Project. “This executive order marks a sad day in the struggle for racial and economic justice.”
Disparate impact claims allow consumers to challenge a wide variety of discriminatory practices aimed at people of color, people with disabilities, families with young children, and women, among others. These discriminatory practices would otherwise, even when identified, go unaddressed. Lawsuits bringing disparate impact claims have exposed and remedied longstanding patterns of discrimination and brought relief to thousands of consumers.
During the subprime lending boom that led to the Great Recession of 2008, communities of color were targeted for high-risk, high interest rate loans, and they were hit especially hard by the financial crisis. Dozens of lawsuits bringing disparate impact claims were filed in an attempt to alter this toxic reality and bring relief to individual consumers. These lawsuits unmasked widespread discriminatory lending practices.
“The Administration’s claim that this order to end disparate impact liability promotes ‘meritocracy and a colorblind society’ is grossly out-of-touch with the reality for people of color, women, LGBTQ+, and people with disabilities,” said Williamson. “Whether intentional or not, discrimination in housing, lending, and credit reporting is a reality for millions of people, and government oversight and regulation is an essential weapon in the ongoing work of dismantling deeply entrenched problems. Disparate impact liability allows the government to address this type of systemic discrimination that has put generations in harm’s way and eroded their civil rights.”
Congress needs to act to ensure that disparate impact remains a robust enforcement tool to hold discriminatory actors accountable and address longstanding systemic harms. States need to act to protect their residents from discriminatory lending and housing practices and push back on the Administration’s attempt to eviscerate civil rights protections.
Related Resources
- Issue Brief: Urgent Action Needed to Preserve Racial Equity and Economic Justice, March 18, 2025
- Letter: Environmental Justice and Civil Rights Advocates’ Response to Petition For Rulemaking to Rescind EPA’s Title VI Disparate Impact Regulations, Sept. 4, 2024
- Amicus Brief: National Association of Mutual Insurance Companies (NAMIC) v. HUD, July 10, 2024
- Comments on HUD’s Implementation of the Fair Housing Act’s Disparate Impact Standard, Oct. 18, 2019
- The Hill: Ensuring equal access to credit for all Americans, op-ed by Odette Williamson, July 21, 2015
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