Disparate Impact and Lending

by Roger Clegg

The Obama administration reasserted today that it will be using “all available legal avenues” to go after lending “discrimination.” Now, I put that sentence’s last word in quotation marks because a major part of this reassertion is that the administration will use the disparate-impact approach to enforcement here. And that means that lending policies that are not discriminatory by their terms, intent, or application — that is, which are not discriminatory at all, by any reasonable definition — will still result in federal lawsuits as long as they disproportionately affect some racial and ethnic groups in comparison to others. Which is to say that the lawsuits are really not about discrimination at all, but about achieving a politically correct racial balance in loans.

Of course, making loans with an eye on race rather than, say, creditworthiness is widely believed to have been a leading cause of the recent economic unpleasantness, but no matter.

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