CFPB’s Advisory Opinion on Fair Lending Laws Signals Chopra’s Regulatory Strategy

CFPB logoAdvisory opinion outlines Equal Credit Opportunity Act protections for borrowers. The bureau, under the leadership of Director Rohit Chopra, will be “dramatically increasing its issuance of guidance.”

05/16/2022 9:45 A.M.

3.5 minute read

The Consumer Financial Protection Bureau issued an advisory opinion on protections under the Equal Credit Opportunity Act last week, a signal that the bureau is moving toward issuing more guidance on regulatory topics.

CFPB Director Rohit Chopra spoke about that strategy in testimony before the House Financial Services Committee in April.

“The CFPB is ramping up its efforts to issue guidance and advisory opinions to assist entities with understanding their obligations under the law,” CFPB Director Rohit Chopra said in a news release on the advisory opinion. “Today’s advisory opinion and accompanying analysis makes clear that anti-discrimination protections do not vanish once a customer obtains a loan.”

The CFPB issued a final Advisory Opinions Policy in 2020 to publicly address regulatory uncertainty in the bureau’s existing regulations and provide guidance to entities.

“The CFPB issued [the] ECOA advisory opinion and accompanying analysis to clarify that ECOA protects people from discrimination in all aspects of a credit arrangement. The advisory opinion is consistent with a recent legal brief filed by the CFPB, the Federal Trade Commission, the Federal Reserve Board of Governors, and the U.S. Department of Justice,” according to the CFPB news release.

Among other things, the advisory opinion states that ECOA continues to protect borrowers after they have applied for and received credit and requires lenders to provide “adverse action notices” to borrowers with existing credit. It is “applicable” as of May 18, according to the Federal Register notice with the opinion.

According to an article from Ballard Spahr law firm, the CFPB’s advisory opinion, and legal briefs on the ECOA, “take the position that despite the wording of the ECOA’s definition of the term ‘applicant,’ the ‘best interpretation’ of the ECOA is that the term includes existing borrowers. By issuing the advisory opinion, the CFPB may be seeking to bolster its ability to litigate the ECOA issue in other cases (as well as head off adverse decisions in other cases).”

Bureau’s Regulatory Strategy

Meanwhile, during House testimony last month, Chopra said the CFPB is “dramatically increasing its issuance of guidance,” especially where it can help small entities and new entrants in the market, ACA International previously reported.

However, members of the House Financial Services Committee countered that the bureau is using public statements and press releases as a way of influencing regulated entities’ behavior.

ACA also noted this trend in its letter to the committee on behalf of members.

“Regulation through press releases, to try to force unresearched agendas in the financial services marketplace, is an extremely dangerous way to regulate major sectors of the economy relied on by consumers,” said ACA CEO Scott Purcell. “Under the Dodd-Frank Reform and Consumer Protection Act, Congress contemplated several checks and balances on this system of creating policy, including the Small Business Regulatory Enforcement Fairness Act of 1996 process to protect small businesses from overly burdensome rules that do not properly consider their size and structure. The creation of new policies outside of this process disregards the Dodd-Frank Act and the original purpose of the CFPB.”

ACA Advocacy Continues

In the long term, as the bureau and White House continue to make medical billing and credit reporting, as well as student loans, prominent issues, ACA continues advocating with Congress and the agencies on their behalf.

ACA is working diligently to educate members of Congress on both sides of the aisle about the issue of medical billing and credit reporting and the bureau’s regulatory approach.

As Chopra continues his work leading the CFPB, ACA urges the bureau to seek feedback from all stakeholders and plans to continue engagement with the CFPB.

ACA staff and members are meeting with lawmakers during the 2022 Washington Insights Fly-In May 18-19 in Washington, D.C. The Fly-In builds on the success of the October 2021 event, where ACA members met with more than a dozen members of Congress on both sides of the aisle in Washington, D.C.

For more information on ACA’s advocacy efforts and resources to share with lawmakers, read ACA’s new advocacy book.

Check out the Fly-In agenda here and subscribe to ACA Daily and member alerts on our newsroom page for updates on the event.

Related Content from ACA International

Senate Lawmakers Revisit Overreach and Regulatory Burden in Hearing with CFPB Director

CFPB’s ‘Regulation by Press Release’ in the Limelight at Chopra’s House Testimony

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