House Votes to Bar Using Funds for Disparate Impact Litigation

The House of Representatives approved, by a 216-190 vote, an amendment offered by Rep. Scott Garrett (R-N.J.) that would prohibit the Justice Department from using funds for litigation in which it seeks to prove illegal discrimination based on the “disparate impact” theory.

Prior to the vote, bank and credit union trade groups wrote to House members urging their support for the amendment.

“Under the disparate impact theory, even when a lender takes every step to prevent discrimination and treats all consumers fairly and equally, a neutral policy can serve as a basis for very serious and harmful claims in the absence of intentional discrimination,” the trade groups wrote.

“Smaller lenders, in particular, will find it difficult to manage this type of litigation risk,” they said. “Left unchecked, disparate impact enforcement could increase the cost and undermine the availability of credit throughout the economy.”

Read the letter.