WASHINGTON — A proposal by the Consumer Financial Protection Bureau to scale back fair-lending protections under the Equal Credit Opportunity Act would weaken long-standing safeguards against credit discrimination and make borrowing more expensive for many consumers, the National Consumer Law Center said.
In comments submitted to the CFPB, the consumer advocacy group warned that the proposed rule would undermine key protections in the 1974 law, expose borrowers to greater risk of discrimination and reduce access to fair and competitive credit during a period of high costs and economic strain.
The National Consumer Law Center said the changes would disproportionately affect women, Black and Latino borrowers, servicemembers and veterans, Native Americans and older adults seeking credit for purposes such as buying a home or car or starting a small business.
‘Radical Departure’
“The administration’s proposed changes to the ECOA represent a radical departure from the law’s core mission to protect consumers from discrimination,” Odette Williamson, director of racial justice advocacy at the group, said in a statement.
She added that weakening the rules would leave consumers more vulnerable to discriminatory practices and raise the cost of lending for groups historically excluded from credit markets.
About the Law
Congress enacted the Equal Credit Opportunity Act to address systemic discrimination in lending. Before its passage, many women were unable to obtain mortgages or other loans without a male co-signer. The law prohibits discrimination based on race, color, religion, national origin, sex, marital status, age, receipt of public assistance or the exercise of rights under federal consumer protection laws.
The NCLC said discriminatory practices in lending have persisted in various forms, including redlining, reverse redlining and high-cost predatory loans, creating “credit deserts” in many communities while exposing residents to risky and expensive credit.
‘Bearing the Consequences’
“Consumers protected by the ECOA continue to bear the consequences of decades of discriminatory practices,” Jeremiah Battle Jr., a senior attorney at the group, said in a statement. He said the proposed rule would allow discrimination to persist and create new barriers to economic stability for individuals and communities.
The group also warned that weakening ECOA protections related to the exercise of consumer rights could discourage borrowers from challenging illegal debt collection practices at a time when consumer debt and collection activity are rising. Battle said the proposal should be withdrawn in full.
