In the first few months of 2012, lenders were cautiously optimistic that a recent Supreme Court case and a case pending before the Supreme Court would result in a victory for the financial services industry by severely limiting the use of a "disparate impact" analysis in the fair lending arena. Those hopes were dashed when the pending case was withdrawn, and the Administration forcefully announced its determination to continue to use the disparate impact theory to bring governmental fair lending enforcement cases.
Simultaneously (and not coincidentally), the Consumer Financial Protection Bureau (the "CFPB") not only adopted the Administration’s legal position on disparate impact, but also has signaled to the consumer financial services industry it intends to significantly expand the categories of consumer financial products and services which it will review to identify possible discriminatory practices.
This Alert analyzes several of the most notable fair lending developments that occurred in the first half of 2012 from a governmental litigation and regulatory perspective. In addition, it offers our recommendations to clients and friends of the firm regarding the development of risk management practices that might be considered in light of these developments.
Please see full alert below for more information.
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