CFPB extends comment period on overhaul of redlining law

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The Consumer Financial Protection Bureau is extending the comment period for potential changes to its rules related to the Equal Credit Opportunity Act, which prohibits discrimination in credit and lending decisions.

The comment period will be extended by 60 days to Dec. 1, the CFPB said Wednesday, after a coalition of banking trade groups, consumer advocates and civil rights groups asked the bureau this month for more time.

The CFPB issued a request for information on July 28 asking about how it might change the 1974 law and Regulation B. The request covered 10 complex topics on fair-lending enforcement and compliance, including whether the act should be overhauled in light of two separate Supreme Court decisions on gender identity discrimination and “disparate impact,” under which borrowers can allege discrimination even if a lender did not show discriminatory intent.

The CFPB’s request also seeks comment on how lenders use artificial intelligence and machine learning in their underwriting and how the ECOA might support the credit needs of small businesses, particularly those that are minority- and women-owned.

Other topics covered in the request include how the CFPB could encourage lenders to use "affirmative advertising" to cater to disadvantaged groups; the extent to which federal ECOA rules preempt state laws; how to incentivize lender outreach to consumers with limited English proficiency; and whether the agency should provide more clarity "regarding when all or part of the applicant’s income derives from any public assistance program."

The bureau has described its inquiry into the ECOA as “how best to create a regulatory environment that expands access to credit and ensures that all consumers and communities are protected from discrimination in all aspects of a credit transaction.”

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Redlining CFPB Racial Bias Artificial intelligence Machine learning Small business lending