AAG Perez Reiterates DOJ's Emphasis on Lending Discrimination Enforcement
Speaking at a June 23, 2010 Brookings conference, the Department of Justice's Assistant Attorney General for the Civil Rights Division made clear that investigating and prosecuting lending discrimination is a top priority for his administration. As reported on mainjustice.com, AAG Thomas Perez reaffirmed the DOJ's commitment to increased oversight and enforcement of the financial industry, as well as close interaction among the federal regulators that police the financial systems.
Mr. Perez also reiterated that his division will use the "disparate impact" theory to file lending discrimination case. “The government must be a credible deterrent,” he said. “Our Fair Lending Unit will use every tool in our arsenal, including but not limited to disparate impact theory.” Perez made similar remarks at the May 2010 Legal Issues Conference of the Mortgage Banker's Association. The disparate impact theory, as articulated in U.S. Supreme Court's 1971 decision Griggs v. Duke Power Co., 401 U.S. 424 (1971), allows a plaintiff to challenge a facially neutral practice that has an unjustified adverse impact on members of a protected class; evidence of an intent to discriminate is not required. The DOJ's reliance on the disparate impact theory as the sole basis to file a lending discrimination case signals a marked departure from its prior lending discrimination cases, none of which relied exclusively on disparate impact. The department's aggressive approach will undoubtedly lead to a significant increase in enforcement cases and litigation in this area. And lenders anticipating this change in enforcement are wise to adapt their compliance program accordingly.
