Summary of the Fair Lending Provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010

The Dodd- Frank Wall Street Reform and Consumer Protect Act of 2010 establishes the Consumer Financial Protection Bureau and requires it to establish five divisions including the Office of Fair Lending and Equal Opportunity. [1] In addition, as a federal financial regulator, the Bureau has a duty affirmatively further fair housing under The Fair Housing Act of 1968, as amended. [2]

The term --fair lending'' is defined in the Act to mean" fair, equitable, and nondiscriminatory access to credit for consumers." [3] This definition provides the Consumer Financial Protection Bureau with the discretion to broadly interpret and define what constitutes a fair lending violation under the Act.

General Powers

The Office of Fair Lending and Equal Opportunity has explicit power to enforce both the Equal Credit Opportunity Act [4] and the Home Mortgage Disclosure Act. [5] It also appears that the Office will be responsible for the enforcement of the Section 129B of the Truth in Lending Act based on language which prohibits --abusive or unfair lending practices that promote disparities among consumers of equal credit worthiness but of different race, ethnicity, gender, or age. " [6]

The Bureau is responsible for:

oversight and enforcement of Federal laws intended to ensure the fair, equitable, and nondiscriminatory access to credit for both individuals and communities that are enforced by the Bureau;

coordinating fair lending efforts of the Bureau with other Federal agencies and State regulators, as appropriate;

promoting consistent, efficient, and effective enforcement of Federal fair lending laws;

working with private industry, fair lending, civil rights, consumer and community advocates on the promotion of fair lending compliance and education; and

providing annual reports to Congress on the efforts of the Bureau to fulfill its fair lending mandate. [7]

The explicit inclusion of language referring to "access to credit for both individuals and communities" strongly suggests that both disparate treatment and disparate impact cases can be developed by the Office of Fair Lending and Equal Opportunity.

The Equal Credit Opportunity Act was amended to require the collection of Small Business Loan Data. [8] The purpose of this amendment is "to facilitate enforcement of fair lending laws and enable communities, governmental entities, and creditors to identify business and community development needs and opportunities of women-owned, minority owned, and small businesses." [9]

This amendment requires financial institutions to:

1. inquire whether the business is a women-owned, minority-owned, or small business, without regard to whether such application is received in person, by mail, by telephone, by electronic mail or other form of electronic transmission, or by any other means, and whether or not such application is in response to a solicitation by the financial institution; and

2. maintain a record of the responses to such inquiry, separate from the application and accompanying information.

Information compiled and maintained shall be itemized in order to clearly and conspicuously disclose--