Description
Recent months have brought a flurry of activity in the areas of fair banking and fair lending. The change of Administration has drastically changed the focus and priorities of government authorities in ways we never could have imagined.
What are the changes and how will they affect community banking? Consider:
Executive Order 14331 “Guaranteeing Fair Banking for All Americans” (aka The Debanking Order)
- Aim: Prohibit financial institutions from “debanking” (closing accounts or denying services) based on political, religious, or other “reputational risk” factors.
- Effect: Financial institutions must have a valid reason for not banking a customer. What are acceptable, valid reasons?
- Risk: Claims of discrimination. The OCC issued a damning report 12/10/25 on their preliminary findings, finding that banks have “weaponized finance”, and promising to “halt these harmful and unfair practices”.
Executive Order 14281 “Restoring Equality of Opportunity and Meritocracy” (aka The Disparate Impact Order)
- Aim: Prohibit the use of disparate impact legal theory by federal agencies “in all contexts to the maximum degree possible”.
- Effect: Significant shift in fair lending – removing one of the 3 legs of discrimination, leaving overt discrimination and disparate treatment
- Risk: Bank uncertainty and fear that any relaxation of core policies and procedures will leave a financial institution open to litigation, state action, and supervisory look-backs if everything changes again in the next administration.
CFPB’s Shift in Priorities and Changes to Regulation B:
- CFPB’s shift in fair lending: “No longer using disparate impact in supervision or enforcement of fair lending laws”
- Will now only focus on intentional racial discrimination and actual identified victims
- Substantial proposed changes to Reg B, including removal of the Effects Test (disparate impact) when determining if discrimination violates ECOA; changing what constitutes “discouragement” in credit; and amending Special Purpose Credit Programs.
We are watching history unfold before our eyes. Huge changes to statutory interpretation, regulatory supervision, and fair lending enforcement are happening in real time, while we try to keep up.
Understanding what is happening (and why) is paramount to good bank governance. Get up to speed on the facts, to help your bank management make the best informed risk-based decisions to stay compliant and successful.
WHO: Compliance staff, risk managers, loan policy makers, operations managers, operations staff, new accounts, legal, and audit.
* Please note that the recording access will be delivered to you via a downloadable document in your confirmation e-mail. The materials that corresponds with the recording will be automatically delivered upon purchasing via email from the website.
