References to “disparate impact” – the result of practices unintentionally having a disproportionate, negative effect on a protected group, including minorities – are now erased from an examination manual issued by the federal bank deposit insurance agency, it said Friday.
The Federal Deposit Insurance Corp. (FDIC) said the references were removed from four chapters of its Consumer Compliance Examination Manual (CEM) covering fair lending (laws and regulations, appendices, and references) and unfair, deceptive and abusive practices (under the Federal Trade Commission Act and the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank)). The removal of the references also includes removal of how to evaluate disparate impact risk.
In a letter to financial institutions (FIL 41-2025) the agency said the CEM had been updated to “reflect that the FDIC will evaluate potential discrimination under the Equal Credit Opportunity Act and Fair Housing Act only through evidence of disparate treatment.” No other details were provided.
The FDIC described the CEM as including “supervisory policies and examination procedures for evaluating financial institutions’ compliance with federal consumer protection laws and regulations.”
“The CEM is designed to promote consistency and efficiency in the examination process and compliance with applicable laws and regulations,” the agency said. “Financial institutions can use the CEM to obtain more information about the FDIC’s examination process.”
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