Wall Street’s Civil Rights Disgrace: Inside a Quiet, Evil Lobbying Effort
For that reason, disparate impact claims under the FHA have been at the forefront of the legal response to the financial crisis. Several of the nation’s biggest banks have been sued for using subprime lending practices that systematically led to black and Latino borrowers receiving costlier or riskier loans than white borrowers with comparable credit profiles.
For example, many subprime lenders maintained policies that gave brokers discretion to ratchet up the cost of a loan beyond what would be justified by credit considerations. This led to systematically higher rates - accompanied by higher risk of default or foreclosure - for minority borrowers. In other words, minority borrowers were getting less favorable loans, but those differences could not be explained by differences in credit profiles.
This is why the disparate impact framework has landed in the crosshairs of the financial services industry. Along with its allies, the industry has mounted a concerted campaign in the courts to abolish disparate impact claims under the FHA. If successful, this campaign of deregulation could have vast consequences for enforcing fair housing and civil rights laws.
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