Compliance Blog

Let's Talk About... Discrimination

Happy Friday and happy birthday weekend to me! I will be accepting snacks and hand written cards all weekend!

pug party

But before we celebrate, today’s blog is dedicated to a few of my personal faves, the Equal Credit Opportunity Act (ECOA) and the Fair Housing Act (FHA). Specifically, we will look at “sex” as a prohibited basis in credit decisions.

It is not news that ECOA makes it “unlawful for any creditor to discriminate against any applicant, with respect to any aspect of a credit transaction on the basis of race, color, religion, national origin, sex or marital status, or age.” It is also no secret that Regulation B implements this law by listing “sex” as a prohibited basis on which to make a credit decision. Similarly, the FHA makes it unlawful to “discriminate against any person in making available [a residential real estate related] transaction, or in the terms or conditions of such a transaction, because of race, color, religion, sex, handicap, familial status, or national origin.”

Although each of these rules has been around for a while, there has been more recent discussion about whether discrimination based on an applicant’s “sex” includes discrimination based on an applicant’s sexual orientation or gender identity. Well, the official verdict is in… and the Supreme Court, the CFPB, the Department of Housing and Urban Development (HUD) and the white house have all chimed in to make the answer quite clear. Yes.

Many credit unions have already included these types of protections by practice and have implemented procedures to protect individuals beyond what federal law requires. However, it is important to discuss the official interpretations of these rules.

Last year, the U.S. Supreme Court made a decision in the case Bostock v. Clayton County, Georgia, where a gay man working for Clayton County was allegedly criticized for his sexual orientation, discouraged from associating with other gay men, and was subsequently terminated. Following his termination, he filed a lawsuit against the county alleging discrimination based on sex (specifically sexual orientation), in violation of Title VII of the Civil Rights Act of 1964. The Supreme Court ruled that prohibition against sex discrimination in Title VII encompasses sexual orientation discrimination and gender identity discrimination.

How does this relate to the laws we referenced earlier?

A few days ago, the Bureau released a final interpretative rule stating that ECOA and Regulation B prohibit discrimination on the basis of sexual orientation and gender identity. The rule relies in part on the findings and reasoning of the Supreme Court in finding that Title VII’s language about sex applies also to sexual orientation and gender identity. The CFPB noted that ECOA includes similar language and therefore the interpretations should align.

Here's a summary of the CFPB’s findings after an analysis of the language of ECOA and considering the Supreme Court’s stance on the issue as it pertains to Title VII:

“In sum, the Bureau finds that under ECOA and Regulation B: (1) sexual orientation discrimination and gender identity discrimination necessarily involve consideration of sex; (2) an applicant’s sex must be a “but for” cause of the injury, but need not be the only cause; and (3) discrimination against individuals, and not merely against groups, is covered. The Bureau also clarifies that ECOA’s and Regulation B’s prohibition against sex discrimination encompasses discrimination motivated by perceived nonconformity with sex-based or gender based stereotypes, as well as discrimination based on an applicant’s associations.”

Similarly, the Department of Housing and Urban Development also released a statement explaining that the Fair Housing Act’s prohibition against discrimination based on sex also prohibits discrimination based on sexual orientation and gender identity.

Here are some of the relevant remarks:

“Enforcing the Fair Housing Act to combat housing discrimination based on sexual orientation and gender identity isn’t just the right thing to do-it’s the correct reading of the law after Bostock. We are simply saying that the same discrimination that the Supreme Court has said is illegal in the workplace is also illegal in the housing market.”

Each of these statements about the scope of non-discrimination laws aligns with the Executive Order on Preventing and Combating Discrimination on the Basis of Gender Identity or Sexual Orientation, issued in January. The order cites the Supreme Court’s decision in Bostock and emphasizes the administration’s goal to ensure protection for individuals who face discrimination based on sexual orientation or gender identity.

About the Author

Loran Jackson, NCCO, Senior Regulatory Compliance Counsel, NAFCU

Loran Jackson, Regulatory Compliance Counsel

Loran Jackson joined NAFCU as Regulatory Compliance Counsel in April 2019 and was named Senior Regulatory Compliance Counsel in February 2021. In her role, she provides daily compliance assistance to member credit unions on a variety of topics. She also writes articles for NAFCU publications and presents at NAFCU conferences

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