Equal Credit Opportunity (Regulation B); Discrimination on the Bases of Sexual Orientation and Gender Identity, 14363-14366 [2021-05233]
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14363
Rules and Regulations
Federal Register
Vol. 86, No. 49
Tuesday, March 16, 2021
This section of the FEDERAL REGISTER
contains regulatory documents having general
applicability and legal effect, most of which
are keyed to and codified in the Code of
Federal Regulations, which is published under
50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by
the Superintendent of Documents.
BUREAU OF CONSUMER FINANCIAL
PROTECTION
12 CFR Part 1002
Equal Credit Opportunity (Regulation
B); Discrimination on the Bases of
Sexual Orientation and Gender Identity
Bureau of Consumer Financial
Protection.
ACTION: Interpretive rule.
AGENCY:
The Bureau of Consumer
Financial Protection (Bureau) is issuing
this interpretive rule to clarify that, with
respect to any aspect of a credit
transaction, the prohibition against sex
discrimination in the Equal Credit
Opportunity Act (ECOA) and Regulation
B, which implements ECOA,
encompasses sexual orientation
discrimination and gender identity
discrimination, including
discrimination based on actual or
perceived nonconformity with sexbased or gender-based stereotypes and
discrimination based on an applicant’s
associations.
DATES: This interpretive rule is effective
on March 16, 2021.
FOR FURTHER INFORMATION CONTACT:
Pavy Bacon, Senior Counsel, Office of
Regulations at 202–435–7700. If you
require this document in an alternative
electronic format, please contact CFPB_
Accessibility@cfpb.gov.
SUPPLEMENTARY INFORMATION:
SUMMARY:
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I. Background
The Bureau is responsible for
administering and enforcing ECOA 1
and its implementing Regulation B.2
ECOA makes it ‘‘unlawful for any
creditor to discriminate against any
applicant, with respect to any aspect of
a credit transaction,’’ on several
enumerated bases, including ‘‘on the
basis of . . . sex . . . ’’ 3 Likewise,
1 15
U.S.C. 1691–1691f.
CFR part 1002.
3 15 U.S.C. 1691(a)(1).
2 12
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Regulation B prohibits a creditor from
discriminating against an applicant on a
prohibited basis (including ‘‘sex’’ 4)
‘‘regarding any aspect of a credit
transaction,’’ and from making ‘‘any oral
or written statement to applicants or
prospective applicants that would
discourage on a prohibited basis a
reasonable person from making or
pursuing an application.’’ 5
On June 15, 2020, in Bostock v.
Clayton County, Georgia, the Supreme
Court ruled that the prohibition against
sex discrimination in Title VII of the
Civil Rights Act of 1964 (Title VII)
encompasses sexual orientation
discrimination and gender identity
discrimination.6 The Court relied on
three key findings to reach its decision:
(1) Sexual orientation discrimination
and gender identity discrimination
necessarily involve consideration of sex;
(2) Title VII’s language requires sex to be
a ‘‘but for’’ cause of the injury, but need
not be the only cause; and (3) Title VII’s
language covers discrimination against
individuals, and not merely against
groups.7
In response to Executive Order 13988,
‘‘Preventing and Combatting
Discrimination on the Basis of Gender
Identity or Sexual Orientation’’,8 which
addresses Bostock, Jeanine M. Worden,
Acting Assistant Secretary for Fair
Housing & Equal Opportunity, released
a memorandum directing the Office of
Fair Housing and Equal Opportunity of
the U.S. Department of Housing and
Urban Development to take the actions
to administer and fully enforce the Fair
Housing Act to prohibit discrimination
because of sexual orientation and
gender identity.9
Before the issuance of the Bostock
opinion, at least twenty states and the
District of Columbia prohibited
discrimination on the bases of sexual
orientation and/or gender identity either
in all credit transactions or in certain
(e.g., housing-related) credit
4 12
CFR 1002.2(z).
CFR 1002.4(a)–(b).
6 Bostock v. Clayton Cty., Georgia, 140 S. Ct. 1731,
207 L. Ed. 2d 218 (2020).
7 Id.
8 86 FR 7023 (Jan. 25, 2021).
9 U.S. Dep’t. of Hous. and Urban Dev.,
Memorandum, Implementation of Executive Order
13988 on the Enforcement of the Fair Housing Act
(Feb. 11, 2021), https://www.hud.gov/sites/dfiles/
PA/documents/HUD_Memo_EO13988.pdf.
5 12
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transactions.10 As such, financial
institutions subject to such laws were
required to comply with those
requirements prior to the issuance of the
Bostock opinion. Many financial
institutions recognize sexual orientation
and/or gender identity to be protected
classes under State laws 11 and may
have determined to incorporate
practices that prohibit discrimination on
these bases.12
10 While not intended to be an all-inclusive list,
the State statutes include Cal. Civ. Code secs. 51,
51.5; Cal. Gov’t Code sec. 12955; Colo. Rev. Stat.
sec. 24–34–501(3); Colo. Rev. Stat. sec. 5–3–210;
Conn. Gen. Stat. secs. 46a–81e, 46a–81f, 46a–98;
Del. Code Ann. tit. 6, sec. 4604; D.C. Code sec. 2–
1402.21; Haw. Rev. Stat secs. 515–3, 515–5; 775 Ill.
Comp. Stat. sec. 5/1–102(A), 5/1–103(O), (O1), and
(Q), 5/4–102, 5/3–102, 5/4–103; Iowa Code secs.
216.8A, 216.10; Me. Rev. Stat. tit. 5, sec. 4553(5–
C) and (9–C), 4595 to 4598, 4581 to 4583; Md. Code
Ann, State Gov’t secs. 20–705, 20–707, 20–1103;
Mass. Gen. Laws ch. 151B, sec. 4(3B), (14); Minn.
Stat. secs. 363A.03 (Subd. 44), 363A.09(3), 363A.16
(Subds.1 and 3), 363A.17; N.H. Rev. Stat. Ann. sec.
354–A:10; N.J. Stat. Ann. sec. 10:5–12(i); N.M. Stat.
Ann. sec. 28–1–7; N.Y. Civ. Rights Law sec. 40–c(2);
N.Y. Exec. Law sec. 296–A; Or. Rev. Stat. secs.
174.100(7), 659A.421; R.I. Gen. Laws secs. 34–37–
4(a) through (c), 34–37–4.3, 34–37–5.4; Va. Code
Ann. sec. 6.2–501(B)(1); 15.2–853; 15.2–965; Vt.
Stat. Ann. tit. 8, sec. 10403; Vt. Stat. Ann. tit. 9, sec.
2362, 2410, 4503(a)(6); Wash. Rev. Code sec.
49.60.030, 49.60.040 (14), (26), and (27), 49.60.175,
49.60.222; Wis. Stat. secs. 106.50, 224.77(1)(o).
Also, since Bostock, the North Dakota Department
of Labor and Human Rights has interpreted the
North Dakota statutes against sex discrimination to
include sexual orientation and gender identity
discrimination. N.D. Dep’t of Lab. and Hum. Rts.
(NDDOLHR), NDDOLHR Now Accepting and
Investigating Charges of Discrimination Based on
Sexual Orientation and Gender Identity (June 18,
2020), https://www.nd.gov/labor/news/nddolhrnow-accepting-and-investigating-chargesdiscrimination-based-sexual-orientation-and. There
are also a number of municipalities that include
sexual orientation and/or gender identity in their
credit discrimination ordinances. See, e.g., Austin
City Code sec. 5–1–1 et seq.; N.Y.C. Admin. Code
secs. 8–101, 8–107 et seq.; S.F. Police Code, sec.
3304(a) et seq.
11 See Consumer Bankers Ass’n (CBA), Comment
Letter on Request for Information on the Equal
Credit Opportunity Act and Regulation B (RFI),
Document No. CFPB–2020–0026–0147 (Dec. 1,
2020) (‘‘Many CBA members currently consider
sexual orientation and gender identity to be
protected classes under [S]tate laws, therefore,
potential post Bostock changes to how the Bureau
interprets ECOA’s prohibition on discrimination on
the basis of sex would likely align with, and would
not significantly alter, practices that comply with
state laws.’’).
12 See, e.g., Off. of the Comptroller of the
Currency, Interpretive Letter #998 (Mar. 9, 2004),
https://www.occ.gov/topics/charters-and-licensing/
interpretations-and-actions/2004/int998.pdf
(‘‘[W]hat would generally be understood to be an
‘anti-discrimination’ law . . . [e.]g., laws that
prohibit lenders from discriminating on the basis of
race, religion, ethnicity, gender, sexual orientation,
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The Bureau has previously indicated
that legal developments would lead to
prohibitions against sex discrimination
being interpreted to afford broad
protection against discrimination on the
bases of sexual orientation and gender
identity. In 2016, in response to an
inquiry from Services & Advocacy for
GLBT Elders (SAGE), the Bureau sent a
letter addressing coverage of sex
discrimination involving sexual
orientation and gender identity under
ECOA.13 The letter to SAGE concluded
that ‘‘the current state of the law
supports arguments that the prohibition
of sex discrimination in ECOA and
Regulation B affords broad protection
against credit discrimination on the
bases of gender identity and sexual
orientation, including but not limited to
discrimination based on actual or
perceived nonconformity with sexbased or gender-based stereotypes as
well as discrimination based on one’s
associations.’’ 14 Further, the letter to
SAGE stated that the Bureau ‘‘will
continue to monitor these legal
developments closely as we strive to
ensure that our interpretation and
application of laws and rules under our
jurisdiction, including ECOA and
Regulation B, appropriately reflect the
evolving precedents interpreting sexual
discrimination law.’’ 15 The Bureau also
incorporated its views regarding sex
discrimination under ECOA and
Regulation B into its ECOA brochure
and AskCFPB materials.16
After the Supreme Court issued the
Bostock opinion, diverse stakeholders
asked the Bureau to clarify that ECOA’s
and Regulation B’s prohibition of ‘‘sex’’
discrimination includes discrimination
on the bases of sexual orientation and/
disability, or the like . . . would not be
preempted.’’) (emphasis in original); Nat’l Cmty.
Reinvestment Coal., Comment Letter on RFI,
Document No. CFPB–2020–0026–0123 (Dec. 1,
2020) (noting that ‘‘defense attorneys have already
informed the mortgage industry that as more State
laws incorporate this robust definition of sex, they
should incorporate it into their policies and
procedures’’) (citation omitted).
13 See Letter from Bureau of Consumer Fin. Prot.,
to Serv. & Advocacy for GLBT Elders (SAGE), (Aug.
30, 2016), https://files.consumerfinance.gov/f/
documents/cfpb_sage-response-letter_2021-02.pdf.
14 Id. at 7.
15 Id.
16 See Bureau of Consumer Fin. Prot., Helping
consumers understand credit discrimination (Mar.
2017), https://files.consumerfinance.gov/f/
documents/201703_cfpb_handout_ECOA_helping_
consumers.pdf; Bureau of Consumer Fin. Prot.,
What protections do I have against credit
discrimination?, https://www.consumerfinance.gov/
fair-lending/. (Both state: ‘‘Currently, the law
supports arguments that the prohibition against sex
discrimination also affords broad protection from
discrimination based on a consumer’s gender
identity and sexual orientation.’’). The Bureau will
update these and other materials to reflect this
interpretive rule.
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or gender identity. Many comments to
the Bureau’s recent Request for
Information on the Equal Credit
Opportunity Act and Regulation B
(RFI) 17 from a variety of stakeholders,
including consumer and civil rights
advocates, a local government official,
an academic institution, and industry
representatives, reiterated this request
for regulatory clarification.18 The
Bureau is issuing this interpretive rule
to address any regulatory uncertainty
that may still exist under ECOA and
Regulation B as to the term ‘‘sex’’ so as
to ensure the fair, equitable, and
nondiscriminatory access to credit for
both individuals and communities and
to ensure that consumers are protected
from discrimination.19 This interpretive
rule serves a stated purpose of
Regulation B, which is to ‘‘promote the
availability of credit to all creditworthy
applicants without regard to . . . sex
. . . ’’ 20
II. Discussion
The Bureau interprets the ECOA and
Regulation B prohibitions against
discrimination on the basis of ‘‘sex’’ to
include discrimination based on sexual
orientation and/or gender identity. The
Bureau’s interpretation is consistent
with the Court’s conclusion in Bostock
regarding sex discrimination under Title
VII.21
17 85
FR 46600 (Aug. 3, 2020).
e.g., Nat’l Fair Hous. All., Comment Letter
on RFI, Document No. CFPB–2020–0026–0137 (Dec.
1, 2020); City of Houston, City Controller, Comment
Letter on RFI, Document No. CFPB–2020–0026–
0120 (Dec. 1, 2020); Steven Trovarelli, Comment
Letter on RFI, CFPB–2020–0026–0051 (Oct. 1,
2020); Anonymous, Comment Letter on RFI,
Document No. CFPB–2020–0026–0064– (Nov. 3,
2020); Consortium for Citizens with Disabilities Fin.
Sec. & Poverty Task Force, Comment Letter on RFI,
Document No. CFPB–2020–0026–0104– (Dec. 1,
2020); Nat’l Women’s Law Ctr., Comment Letter on
RFI, Document No. CFPB–2020–0026–0112–A1
(Dec. 1, 2020); Cmty. Dev. Bankers Ass’n (CDBA),
Comment Letter on RFI, Document No. CFPB–
2020–0026–0113 (Dec. 1, 2020); Mortg. Bankers
Ass’n, Comment Letter on RFI, Document No.
CFPB–2020–0026–0115 (Dec. 1, 2020); Nat’l Cmty.
Reinvestment Coal., Comment Letter on RFI,
Document No. CFPB–2020–0026–0123 (Dec. 1,
2020); LendingClub, Comment Letter on RFI,
Document No. CFPB–2020–0026–0126 (Dec. 2,
2020); Nat’l Consumer Law Ctr., Comment Letter on
RFI, Document No. CFPB–2020–0026–0129–A1
(Dec. 2, 2020); The Williams Institute, Comment
Letter on RFI, Document No. CFPB–2020–0026–
0132 (Dec. 2, 2020); Nat’l Disability Rts. Network,
Comment Letter on RFI, Document No. CFPB–
2020–0026–0139 (Dec. 2, 2020); Serv. & Advocacy
for GLBT Elders (SAGE), Comment Letter on RFI,
Document No. CFPB–2020–0026–0141 (Dec. 2,
2020); Ctr. for Am. Progress, Comment Letter on
RFI, Document No. CFPB–2020–0026–0144 (Dec. 2,
2020); Consumer Bankers Ass’n, Comment Letter on
RFI, Document No. CFPB–2020–0026–0147 (Dec. 2,
2020).
19 12 U.S.C. 5493(c)(2)(A), 5511(b)(2).
20 12 CFR 1002.1(b).
21 See Bostock, 140 S. Ct. 1731.
18 See,
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It is well established that ECOA and
Title VII are generally interpreted
consistently.22 Like Title VII,23 ECOA
prohibits sex discrimination (among
other bases) and does not require that
sex (or other protected characteristics)
be the sole or primary reason for an
action to be discriminatory.24 Like Title
VII,25 ECOA applies to sex
discrimination against individuals, not
just to situations where all men or all
women (or any other group of people
with a common protected characteristic)
are discriminated against
22 See, e.g., Equal Credit Opportunity Act
Amendments of 1976, Public Law 94–239, 114 Stat.
246 (1976); S. Rep. 94–589, at 4–5 (1976), reprinted
in 1976 U.S.C.C.A.N. 403. (‘‘judicial constructions
of anti-discrimination legislation in the
employment field . . . are intended to serve as
guides in the application of this [Equal Credit
Opportunity] Act’’); Mercado-Garcia v. Ponce Fed.
Bank, 979 F.2d 890, 893 (1st Cir. 1992) (applying
Title VII standards in interpreting ECOA); Bhandari
v. First Nat’l Bank of Commerce, 808 F.2d 1082,
1100 (5th Cir. 1987) (same); Rosa v. Park W. Bank
& Tr. Co., 214 F.3d 213, 215 (1st Cir. 2000)
(‘‘look[ing] to Title VII case law’’ and reversing the
dismissal of a sex discrimination claim filed by a
transgender person who alleged being denied a loan
application for failing to appear in clothing
consistent with the sex reflected on their
identification cards). See also Bostock, 140 S. Ct. at
1778 (Alito, S., dissenting) (expressing the view that
the decision ‘‘is virtually certain to have farreaching consequences’’ including, specifically,
with regard to ECOA).
23 Bostock, 140 S. Ct. at 1734 (holding that under
Title VII, ‘‘the plaintiff’s sex need not be the sole
or primary cause of the employer’s adverse action’’).
24 See Official Staff Commentary, 12 CFR part
1002, supp. I, ¶ 4(a)–1) (‘‘Disparate treatment on a
prohibited basis is illegal whether or not it results
from a conscious intent to discriminate.’’); Saldana
v. Citibank, Fed. Sav. Bank, No. 93 C 4164, 1996
WL 332451, at *2 (N.D. Ill. June 13, 1996) (‘‘To
establish a case of lending discrimination under the
[Fair Housing Act] or the ECOA, [plaintiff] does not
need to prove an actual intent to discriminate on
the part of [defendant], but she must show that race
played some role in [defendant’s] decision.’’).
Moreover, the 1994 Interagency Policy Statement on
Discrimination in Lending (Policy Statement)
provides an illustration of disparate treatment
where the applicants’ minority status was not the
sole or primary reason for the loan denial since
adverse credit information was also a factor in the
decision. The illustration states that a nonminority
couple applied for an automobile loan. The lender
found adverse information in the couple’s credit
report. The lender discussed the credit report with
them and determined that the adverse information
(a judgment against the couple) was incorrect since
the judgment had been vacated. The nonminority
couple was granted their loan. A minority couple
applied for a similar loan with the same lender.
Upon discovering adverse information in the
minority couple’s credit report, the lender denied
the loan application on the basis of the adverse
information without giving the couple an
opportunity to discuss the report. 59 FR 18266,
18268 (Apr. 15, 1994); Bureau of Consumer Fin.
Prot., Bulletin 2012–04 (Fair Lending) (Apr. 18,
2012), https://files.consumerfinance.gov/f/201404_
cfpb_bulletin_lending_discrimination.pdf (the
Bureau expressed its concurrence with the Policy
Statement).
25 Bostock, 140 S. Ct. at 1734 (finding that ‘‘an
employer cannot escape liability [under Title VII]
by demonstrating that it treats males and females
comparably as groups’’).
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categorically.26 Indeed, Regulation B
clarifies that ECOA prohibits
discrimination based not only on the
characteristics of an applicant but also
based on the characteristics of a person
with whom an applicant associates.27
The Bureau believes that even though
the term ‘‘sex’’ is not defined in ECOA
or Regulation B, the prohibitions against
discrimination on the basis of ‘‘sex’’
under ECOA and Regulation B are
correctly interpreted to include
discrimination based on sexual
orientation and/or gender identity. As
explained below and consistent with the
Court’s analysis in the Bostock opinion,
this conclusion can be based on ‘‘no
more than the straightforward
application of legal terms with plain
and settled meanings.’’ 28 But, even if it
were not so straightforward, the Bureau
would still reach the same conclusion
based on its expertise in interpreting
ECOA and Regulation B. 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 sexbased or gender-based stereotypes, as
well as discrimination based on an
applicant’s associations.
First, under ECOA and Regulation B,
as under Title VII, sexual orientation
discrimination and gender identity
discrimination necessarily involve
consideration of sex. For example, if a
creditor declines the loan application of
26 While Title VII prohibits discrimination against
‘‘any individual,’’ 42 U.S.C. 2000e–2(a)(1), and
ECOA prohibits discrimination against ‘‘any
applicant,’’ 15 U.S.C. 1691(a), both statutes refer to
a singular person or applicant rather than a group.
ECOA defines an ‘‘applicant’’ as ‘‘any person who
applies to a creditor directly for an extension,
renewal, or continuation of credit or applies to a
creditor indirectly by use of an existing credit plan
for an amount exceeding a previously established
credit limit.’’ 15 U.S.C. 1691a(b). Regulation B
defines an ‘‘applicant’’ as ‘‘any person who requests
or who has received an extension of credit from a
creditor, and includes any person who is or may
become contractually liable regarding an extension
of credit.’’ 12 CFR 1002.2(e).
27 12 CFR part 1002, supp. I, ¶ 2(z)–1 (providing
that ‘‘prohibited basis refers not only to
characteristics—the race, color, religion, national
origin, sex, marital status, or age—of an applicant
(or officers of an applicant in the case of a
corporation) but also to the characteristics of
individuals with whom an applicant is affiliated or
with whom the applicant associates’’).
28 Bostock, 140 S. Ct. at 1743.
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a male applicant on the basis that he is
attracted to men, the creditor
discriminates against him for traits or
actions it tolerates in female applicants;
further, this discrimination is
motivated, at least partly, by the
applicant ‘‘failing to fulfill traditional
sex stereotypes.’’ 29 Or, if a creditor
declines the loan forbearance
application of a transgender person who
was identified as male at birth but who
now identifies as female, but approves
the application of an otherwise
similarly-situated applicant who was
identified as female at birth and now
continues to identify as female, the
creditor discriminates against a person
identified as male at birth for traits or
actions that it tolerates in an applicant
identified as female at birth. In these
examples, the individual applicant’s
‘‘sex plays an unmistakable and
impermissible role’’ 30 in the credit
decisions and thus constitutes
discrimination on the basis of sex in
violation of ECOA and Regulation B.
The Bureau’s interpretation is consistent
with the Supreme Court’s conclusion in
Bostock that ‘‘it is impossible to
discriminate against a person for being
homosexual or transgender without
discriminating against that individual
based on sex.’’ 31
Second, under ECOA and Regulation
B, as under Title VII, sex does not have
to be the sole or primary reason for an
action to be discriminatory.32 For
example, when a creditor rejects an
applicant on the basis of their being gay
or transgender, two causal factors may
be in play—both the individual’s sex
and something else (the sex to which
the individual is attracted or with which
the individual identifies).33 Under
ECOA and Regulation B, if a creditor
would not have rejected a credit
applicant or discouraged a prospective
applicant but for that individual’s sex,
the causation standards are met, and
liability may attach.34
Third, ECOA and Regulation B, like
Title VII, apply to sex discrimination
against individuals, not just to
situations where all men or all women
are discriminated against
29 Id.
at 1742.
at 1741–42.
31 Id. at 1741. Notwithstanding differences in the
ways that Title VII and ECOA phrase their
prohibition against sex discrimination, the Bureau
interprets ECOA and Regulation B to incorporate
the Bostock principles and reasoning with respect
to the recognition of sexual orientation
discrimination and gender identity discrimination
as sex discrimination under ECOA and Regulation
B.
32 See id. at 1744; 59 FR 18266, 18268 (Apr. 15,
1994).
33 See id. at 1742.
34 See id. at 1742; see also Rosa, 214 F.3d at 215.
30 Id.
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categorically.35 Further, ECOA and
Regulation B, like Title VII, work to
protect individuals of all sexes from
discrimination, and do so equally.36 For
example, a creditor who rejects an
application from a woman because the
loan officer regards her as insufficiently
feminine, and also rejects an application
from a man because the loan officer
regards him as being insufficiently
masculine, may treat men and women
as groups more or less equally. But in
both scenarios, the creditor has
discriminated against an applicant in
violation of ECOA and Regulation B by
rejecting an individual applicant in part
because of sex. Instead of avoiding
ECOA exposure, this creditor ‘‘doubles
it.’’ 37 It is no defense for a creditor to
argue that it is equally happy to reject
male and female applicants who are gay
or transgender because each instance of
discriminating against an individual
applicant because of that individual’s
sex is an independent violation of
ECOA and Regulation B.38
Last, the Bureau interprets the ECOA
and Regulation B prohibition against
discrimination on the basis of ‘‘sex’’ to
also include discrimination motivated
by perceived nonconformity with sexbased or gender-based stereotypes,
including those related to gender
identity and/or sexual orientation, as
well as discrimination based on an
applicant’s associations. An example of
discriminatory sex-based or genderbased stereotyping occurs if a small
business lender discourages a small
business owner appearing at its office
from applying for a business loan and
tells the prospective applicant to go
home and change because, in the view
of the creditor, the small business
customer’s attire does not accord with
the customer’s gender.39 The Bureau’s
interpretation regarding discriminatory
stereotyping is consistent with multiple
court decisions 40 and with the Court’s
Bostock decision.41 The Bureau’s
35 See Bostock, 140 S. Ct. at 1740–41; see also
Rosa, 214 F.3d at 215 (finding a potential ECOA
claim where the plaintiff ‘‘did not receive the loan
application because he was a man, whereas a
similarly situated woman would have received the
loan application’’).
36 See Bostock, 140 S. Ct. at 1741.
37 See id. at 1741.
38 See id. at 1742–43.
39 See, e.g., Rosa, 214 F.3d at 214–15.
40 See EEOC v. Boh Bros. Constr. Co., 731 F.3d
444, 457–58 (5th Cir. 2013) (en banc); Glenn v.
Brumby, 663 F.3d 1312, 1314, 1320–21 (11th Cir.
2011); Barnes v. City of Cincinnati, 401 F.3d 729,
735–37 (6th Cir. 2005); Nichols v. Azteca Rest.
Enterprises, Inc., 256 F.3d 864, 870, 874–75 (9th
Cir. 2001); Rosa, 214 F.3d at 215.
41 See Bostock, 140 S. Ct. at 1742–43 (stating that
an employer who fires employees ‘‘for failing to
fulfill traditional sex stereotypes doubles rather
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interpretation regarding associational
discrimination is similarly consistent
with the Court’s reasoning in Bostock
regarding how discrimination based on
the sex, including sexual orientation
and/or gender identity, of the persons
with whom the individual associates is
prohibited under Title VII.42 A creditor
engages in such associational
discrimination if it, for example,
requires a person applying for credit
who is married to a person of the samesex to provide different documentation
of the marriage than a person applying
for credit who is married to a person of
the opposite sex. The Bureau’s
interpretation is consistent with the
principle, applied by Federal agencies
for decades, that credit discrimination
on a prohibited basis includes
discrimination against an applicant
because of the protected characteristics
of individuals with whom they are
affiliated or associated (e.g., spouses,
domestic partners, dates, friends,
coworkers).43 Moreover, the Bureau has
previously established that a creditor
may not discriminate against an
applicant because of that person’s
personal or business dealings with
members of a protected class, because of
the protected class of any persons
associated with the extension of credit,
or because of the protected class of other
residents in the neighborhood where the
property offered as collateral is
located.44
For these reasons, the ECOA and
Regulation B prohibition against
than eliminates Title VII liability, an employer who
fires [employees] for being gay or transgender does
the same’’).
42 See id. at 1748 (‘‘So, for example, when it
comes to homosexual employees, male sex and
attraction to men are but-for factors that can
combine to get them fired. The fact that female sex
and attraction to women can also get an employee
fired does no more than show the same outcome
can be achieved through the combination of
different factors. In either case, though, sex plays
an essential but-for role.’’).
43 See Equal Credit Opportunity; Revision of
Regulation B; Official Staff Commentary, 50 FR
48018, 48049 (Nov. 20, 1985) (providing that
discrimination on a ‘‘prohibited basis refers not
only to characteristics—the race, color, religion,
national origin, sex, marital status, or age—of an
applicant (or officers of an applicant in the case of
a corporation) but also to the characteristics of
individuals with whom an applicant is affiliated or
with whom the applicant associates,’’ or because of
the characteristics of people with whom an
applicant has ‘‘personal or business dealings’’); 59
FR 18266, 18268 (Apr. 15, 1994) (stating that ‘‘A
lender may not discriminate on a prohibited basis
because of the characteristics of: [a] person
associated with a credit applicant (for example, a
co-applicant, spouse, business partner, or live-inaide); or [t]he present or prospective occupants of
the area where property to be financed is located.’’);
76 FR 79442, 79473 (Dec. 21, 2011); 81 FR 25323,
25325 (Apr. 28, 2016); Official Staff Commentary,
12 CFR part 1002, supp. I, ¶ 2(z)–1).
44 Official Staff Commentary, 12 CFR part 1002,
supp. I, ¶ 2(z)–1).
VerDate Sep<11>2014
15:56 Mar 15, 2021
Jkt 253001
discrimination on the basis of ‘‘sex’’
includes discrimination or
discouragement based on sexual
orientation and/or gender identity,
including but not limited to
discrimination based on actual or
perceived nonconformity with sexbased or gender-based stereotypes and
discrimination based on an applicant’s
associations.
III. Legal Authority
This interpretive rule is issued under
the Bureau’s authority to interpret the
ECOA and Regulation B, including
under section 1022(b)(1) of the DoddFrank Wall Street Reform and Consumer
Protection Act, which authorized
guidance as may be necessary or
appropriate to enable the Bureau to
administer and carry out the purposes
and objectives of Federal consumer
financial laws.45
By operation of the ECOA section
706(e), no provision of ECOA sections
701(a), 704(b), 706(a), or 706(b)
imposing any liability applies to any act
done or omitted in good faith in
conformity with this interpretive rule,
notwithstanding that after such act or
omission has occurred, the rule is
amended, rescinded, or determined by
judicial or other authority to be invalid
for any reason.46
IV. Effective Date
Because this rule is solely
interpretive, it is not subject to the 30day delayed effective date for
substantive rules under section 553(d)
of the Administrative Procedure Act.47
Therefore, this rule is effective on
March 16, 2021, the same date that it is
published in the Federal Register.
V. Regulatory Matters
As an interpretive rule, this rule is
exempt from the notice-and-comment
rulemaking requirements of the
Administrative Procedure Act.48
Because no notice of proposed
rulemaking is required, the Regulatory
Flexibility Act does not require an
initial or final regulatory flexibility
analysis.49 The Bureau also has
determined that this interpretive rule
does not impose any new or revise any
existing recordkeeping, reporting, or
disclosure requirements on covered
entities or members of the public that
would be collections of information
requiring approval by the Office of
45 12 U.S.C. 5512(b)(1). The relevant provisions of
the ECOA and Regulation B form part of Federal
consumer financial law. 12 U.S.C. 5481(12)(D), (14).
46 15 U.S.C. 1691(e).
47 75 U.S.C. 553(d).
48 5 U.S.C. 553(b).
49 5 U.S.C. 603(a), 604(a).
PO 00000
Frm 00004
Fmt 4700
Sfmt 4700
Management and Budget under the
Paperwork Reduction Act.50
Pursuant to the Congressional Review
Act,51 the Bureau will submit a report
containing this interpretive rule and
other required information to the U.S.
Senate, the U.S. House of
Representatives, and the Comptroller
General of the United States prior to the
rule’s published effective date. The
Office of Information and Regulatory
Affairs has designated this interpretive
rule as not a ‘‘major rule’’ as defined by
5 U.S.C. 804(2).
Dated: March 5, 2021.
David Uejio,
Acting Director, Bureau of Consumer
Financial Protection.
[FR Doc. 2021–05233 Filed 3–15–21; 8:45 am]
BILLING CODE 4810–AM–P
DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
14 CFR Part 39
[Docket No. FAA–2021–0144; Project
Identifier MCAI–2021–00255–R; Amendment
39–21473; AD 2021–06–06]
RIN 2120–AA64
Airworthiness Directives; Bell Textron
Canada Limited Helicopters
Federal Aviation
Administration (FAA), DOT.
ACTION: Final rule; request for
comments.
AGENCY:
The FAA is superseding
Emergency Airworthiness Directive
(AD) 2021–05–52 which applied to
certain Bell Textron Canada Limited
(Bell) Model 505 helicopters. Emergency
AD 2021–05–52 required a one-time
visual inspection of the pilot collective
stick and grip assembly (pilot collective
stick), a fluorescent penetrant
inspection (FPI) if no crack was found
during the visual inspection, and
depending on the inspection results,
removing the pilot collective stick from
service and reporting certain
information to Bell. Emergency AD
2021–05–52 also prohibited installing
any pilot collective stick on any
helicopter unless the inspections had
been accomplished. This AD removes
the visual inspection of the pilot
collective stick, requires repetitive FPIs
of the pilot collective stick, and requires
revising the existing Rotorcraft Flight
Manual (RFM) for your helicopter. This
AD retains the reporting requirement
SUMMARY:
50 44
51 5
U.S.C. 3501–3521.
U.S.C. 801 et seq.
E:\FR\FM\16MRR1.SGM
16MRR1
]]>Agencies
[Federal Register Volume 86, Number 49 (Tuesday, March 16, 2021)]
[Rules and Regulations]
[Pages 14363-14366]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-05233]
========================================================================
Rules and Regulations
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains regulatory documents
having general applicability and legal effect, most of which are keyed
to and codified in the Code of Federal Regulations, which is published
under 50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by the Superintendent of Documents.
========================================================================
Federal Register / Vol. 86, No. 49 / Tuesday, March 16, 2021 / Rules
and Regulations
[[Page 14363]]
BUREAU OF CONSUMER FINANCIAL PROTECTION
12 CFR Part 1002
Equal Credit Opportunity (Regulation B); Discrimination on the
Bases of Sexual Orientation and Gender Identity
AGENCY: Bureau of Consumer Financial Protection.
ACTION: Interpretive rule.
-----------------------------------------------------------------------
SUMMARY: The Bureau of Consumer Financial Protection (Bureau) is
issuing this interpretive rule to clarify that, with respect to any
aspect of a credit transaction, the prohibition against sex
discrimination in the Equal Credit Opportunity Act (ECOA) and
Regulation B, which implements ECOA, encompasses sexual orientation
discrimination and gender identity discrimination, including
discrimination based on actual or perceived nonconformity with sex-
based or gender-based stereotypes and discrimination based on an
applicant's associations.
DATES: This interpretive rule is effective on March 16, 2021.
FOR FURTHER INFORMATION CONTACT: Pavy Bacon, Senior Counsel, Office of
Regulations at 202-435-7700. If you require this document in an
alternative electronic format, please contact
[email protected].
SUPPLEMENTARY INFORMATION:
I. Background
The Bureau is responsible for administering and enforcing ECOA \1\
and its implementing Regulation B.\2\ ECOA makes it ``unlawful for any
creditor to discriminate against any applicant, with respect to any
aspect of a credit transaction,'' on several enumerated bases,
including ``on the basis of . . . sex . . . '' \3\ Likewise, Regulation
B prohibits a creditor from discriminating against an applicant on a
prohibited basis (including ``sex'' \4\) ``regarding any aspect of a
credit transaction,'' and from making ``any oral or written statement
to applicants or prospective applicants that would discourage on a
prohibited basis a reasonable person from making or pursuing an
application.'' \5\
---------------------------------------------------------------------------
\1\ 15 U.S.C. 1691-1691f.
\2\ 12 CFR part 1002.
\3\ 15 U.S.C. 1691(a)(1).
\4\ 12 CFR 1002.2(z).
\5\ 12 CFR 1002.4(a)-(b).
---------------------------------------------------------------------------
On June 15, 2020, in Bostock v. Clayton County, Georgia, the
Supreme Court ruled that the prohibition against sex discrimination in
Title VII of the Civil Rights Act of 1964 (Title VII) encompasses
sexual orientation discrimination and gender identity
discrimination.\6\ The Court relied on three key findings to reach its
decision: (1) Sexual orientation discrimination and gender identity
discrimination necessarily involve consideration of sex; (2) Title
VII's language requires sex to be a ``but for'' cause of the injury,
but need not be the only cause; and (3) Title VII's language covers
discrimination against individuals, and not merely against groups.\7\
---------------------------------------------------------------------------
\6\ Bostock v. Clayton Cty., Georgia, 140 S. Ct. 1731, 207 L.
Ed. 2d 218 (2020).
\7\ Id.
---------------------------------------------------------------------------
In response to Executive Order 13988, ``Preventing and Combatting
Discrimination on the Basis of Gender Identity or Sexual
Orientation'',\8\ which addresses Bostock, Jeanine M. Worden, Acting
Assistant Secretary for Fair Housing & Equal Opportunity, released a
memorandum directing the Office of Fair Housing and Equal Opportunity
of the U.S. Department of Housing and Urban Development to take the
actions to administer and fully enforce the Fair Housing Act to
prohibit discrimination because of sexual orientation and gender
identity.\9\
---------------------------------------------------------------------------
\8\ 86 FR 7023 (Jan. 25, 2021).
\9\ U.S. Dep't. of Hous. and Urban Dev., Memorandum,
Implementation of Executive Order 13988 on the Enforcement of the
Fair Housing Act (Feb. 11, 2021), https://www.hud.gov/sites/dfiles/PA/documents/HUD_Memo_EO13988.pdf.
---------------------------------------------------------------------------
Before the issuance of the Bostock opinion, at least twenty states
and the District of Columbia prohibited discrimination on the bases of
sexual orientation and/or gender identity either in all credit
transactions or in certain (e.g., housing-related) credit
transactions.\10\ As such, financial institutions subject to such laws
were required to comply with those requirements prior to the issuance
of the Bostock opinion. Many financial institutions recognize sexual
orientation and/or gender identity to be protected classes under State
laws \11\ and may have determined to incorporate practices that
prohibit discrimination on these bases.\12\
---------------------------------------------------------------------------
\10\ While not intended to be an all-inclusive list, the State
statutes include Cal. Civ. Code secs. 51, 51.5; Cal. Gov't Code sec.
12955; Colo. Rev. Stat. sec. 24-34-501(3); Colo. Rev. Stat. sec. 5-
3-210; Conn. Gen. Stat. secs. 46a-81e, 46a-81f, 46a-98; Del. Code
Ann. tit. 6, sec. 4604; D.C. Code sec. 2-1402.21; Haw. Rev. Stat
secs. 515-3, 515-5; 775 Ill. Comp. Stat. sec. 5/1-102(A), 5/1-
103(O), (O1), and (Q), 5/4-102, 5/3-102, 5/4-103; Iowa Code secs.
216.8A, 216.10; Me. Rev. Stat. tit. 5, sec. 4553(5-C) and (9-C),
4595 to 4598, 4581 to 4583; Md. Code Ann, State Gov't secs. 20-705,
20-707, 20-1103; Mass. Gen. Laws ch. 151B, sec. 4(3B), (14); Minn.
Stat. secs. 363A.03 (Subd. 44), 363A.09(3), 363A.16 (Subds.1 and 3),
363A.17; N.H. Rev. Stat. Ann. sec. 354-A:10; N.J. Stat. Ann. sec.
10:5-12(i); N.M. Stat. Ann. sec. 28-1-7; N.Y. Civ. Rights Law sec.
40-c(2); N.Y. Exec. Law sec. 296-A; Or. Rev. Stat. secs. 174.100(7),
659A.421; R.I. Gen. Laws secs. 34-37-4(a) through (c), 34-37-4.3,
34-37-5.4; Va. Code Ann. sec. 6.2-501(B)(1); 15.2-853; 15.2-965; Vt.
Stat. Ann. tit. 8, sec. 10403; Vt. Stat. Ann. tit. 9, sec. 2362,
2410, 4503(a)(6); Wash. Rev. Code sec. 49.60.030, 49.60.040 (14),
(26), and (27), 49.60.175, 49.60.222; Wis. Stat. secs. 106.50,
224.77(1)(o). Also, since Bostock, the North Dakota Department of
Labor and Human Rights has interpreted the North Dakota statutes
against sex discrimination to include sexual orientation and gender
identity discrimination. N.D. Dep't of Lab. and Hum. Rts. (NDDOLHR),
NDDOLHR Now Accepting and Investigating Charges of Discrimination
Based on Sexual Orientation and Gender Identity (June 18, 2020),
https://www.nd.gov/labor/news/nddolhr-now-accepting-and-investigating-charges-discrimination-based-sexual-orientation-and.
There are also a number of municipalities that include sexual
orientation and/or gender identity in their credit discrimination
ordinances. See, e.g., Austin City Code sec. 5-1-1 et seq.; N.Y.C.
Admin. Code secs. 8-101, 8-107 et seq.; S.F. Police Code, sec.
3304(a) et seq.
\11\ See Consumer Bankers Ass'n (CBA), Comment Letter on Request
for Information on the Equal Credit Opportunity Act and Regulation B
(RFI), Document No. CFPB-2020-0026-0147 (Dec. 1, 2020) (``Many CBA
members currently consider sexual orientation and gender identity to
be protected classes under [S]tate laws, therefore, potential post
Bostock changes to how the Bureau interprets ECOA's prohibition on
discrimination on the basis of sex would likely align with, and
would not significantly alter, practices that comply with state
laws.'').
\12\ See, e.g., Off. of the Comptroller of the Currency,
Interpretive Letter #998 (Mar. 9, 2004), https://www.occ.gov/topics/charters-and-licensing/interpretations-and-actions/2004/int998.pdf
(``[W]hat would generally be understood to be an `anti-
discrimination' law . . . [e.]g., laws that prohibit lenders from
discriminating on the basis of race, religion, ethnicity, gender,
sexual orientation, disability, or the like . . . would not be
preempted.'') (emphasis in original); Nat'l Cmty. Reinvestment
Coal., Comment Letter on RFI, Document No. CFPB-2020-0026-0123 (Dec.
1, 2020) (noting that ``defense attorneys have already informed the
mortgage industry that as more State laws incorporate this robust
definition of sex, they should incorporate it into their policies
and procedures'') (citation omitted).
---------------------------------------------------------------------------
[[Page 14364]]
The Bureau has previously indicated that legal developments would
lead to prohibitions against sex discrimination being interpreted to
afford broad protection against discrimination on the bases of sexual
orientation and gender identity. In 2016, in response to an inquiry
from Services & Advocacy for GLBT Elders (SAGE), the Bureau sent a
letter addressing coverage of sex discrimination involving sexual
orientation and gender identity under ECOA.\13\ The letter to SAGE
concluded that ``the current state of the law supports arguments that
the prohibition of sex discrimination in ECOA and Regulation B affords
broad protection against credit discrimination on the bases of gender
identity and sexual orientation, including but not limited to
discrimination based on actual or perceived nonconformity with sex-
based or gender-based stereotypes as well as discrimination based on
one's associations.'' \14\ Further, the letter to SAGE stated that the
Bureau ``will continue to monitor these legal developments closely as
we strive to ensure that our interpretation and application of laws and
rules under our jurisdiction, including ECOA and Regulation B,
appropriately reflect the evolving precedents interpreting sexual
discrimination law.'' \15\ The Bureau also incorporated its views
regarding sex discrimination under ECOA and Regulation B into its ECOA
brochure and AskCFPB materials.\16\
---------------------------------------------------------------------------
\13\ See Letter from Bureau of Consumer Fin. Prot., to Serv. &
Advocacy for GLBT Elders (SAGE), (Aug. 30, 2016), https://files.consumerfinance.gov/f/documents/cfpb_sage-response-letter_2021-02.pdf.
\14\ Id. at 7.
\15\ Id.
\16\ See Bureau of Consumer Fin. Prot., Helping consumers
understand credit discrimination (Mar. 2017), https://files.consumerfinance.gov/f/documents/201703_cfpb_handout_ECOA_helping_consumers.pdf; Bureau of Consumer
Fin. Prot., What protections do I have against credit
discrimination?, https://www.consumerfinance.gov/fair-lending/.
(Both state: ``Currently, the law supports arguments that the
prohibition against sex discrimination also affords broad protection
from discrimination based on a consumer's gender identity and sexual
orientation.''). The Bureau will update these and other materials to
reflect this interpretive rule.
---------------------------------------------------------------------------
After the Supreme Court issued the Bostock opinion, diverse
stakeholders asked the Bureau to clarify that ECOA's and Regulation B's
prohibition of ``sex'' discrimination includes discrimination on the
bases of sexual orientation and/or gender identity. Many comments to
the Bureau's recent Request for Information on the Equal Credit
Opportunity Act and Regulation B (RFI) \17\ from a variety of
stakeholders, including consumer and civil rights advocates, a local
government official, an academic institution, and industry
representatives, reiterated this request for regulatory
clarification.\18\ The Bureau is issuing this interpretive rule to
address any regulatory uncertainty that may still exist under ECOA and
Regulation B as to the term ``sex'' so as to ensure the fair,
equitable, and nondiscriminatory access to credit for both individuals
and communities and to ensure that consumers are protected from
discrimination.\19\ This interpretive rule serves a stated purpose of
Regulation B, which is to ``promote the availability of credit to all
creditworthy applicants without regard to . . . sex . . . '' \20\
---------------------------------------------------------------------------
\17\ 85 FR 46600 (Aug. 3, 2020).
\18\ See, e.g., Nat'l Fair Hous. All., Comment Letter on RFI,
Document No. CFPB-2020-0026-0137 (Dec. 1, 2020); City of Houston,
City Controller, Comment Letter on RFI, Document No. CFPB-2020-0026-
0120 (Dec. 1, 2020); Steven Trovarelli, Comment Letter on RFI, CFPB-
2020-0026-0051 (Oct. 1, 2020); Anonymous, Comment Letter on RFI,
Document No. CFPB-2020-0026-0064- (Nov. 3, 2020); Consortium for
Citizens with Disabilities Fin. Sec. & Poverty Task Force, Comment
Letter on RFI, Document No. CFPB-2020-0026-0104- (Dec. 1, 2020);
Nat'l Women's Law Ctr., Comment Letter on RFI, Document No. CFPB-
2020-0026-0112-A1 (Dec. 1, 2020); Cmty. Dev. Bankers Ass'n (CDBA),
Comment Letter on RFI, Document No. CFPB-2020-0026-0113 (Dec. 1,
2020); Mortg. Bankers Ass'n, Comment Letter on RFI, Document No.
CFPB-2020-0026-0115 (Dec. 1, 2020); Nat'l Cmty. Reinvestment Coal.,
Comment Letter on RFI, Document No. CFPB-2020-0026-0123 (Dec. 1,
2020); LendingClub, Comment Letter on RFI, Document No. CFPB-2020-
0026-0126 (Dec. 2, 2020); Nat'l Consumer Law Ctr., Comment Letter on
RFI, Document No. CFPB-2020-0026-0129-A1 (Dec. 2, 2020); The
Williams Institute, Comment Letter on RFI, Document No. CFPB-2020-
0026-0132 (Dec. 2, 2020); Nat'l Disability Rts. Network, Comment
Letter on RFI, Document No. CFPB-2020-0026-0139 (Dec. 2, 2020);
Serv. & Advocacy for GLBT Elders (SAGE), Comment Letter on RFI,
Document No. CFPB-2020-0026-0141 (Dec. 2, 2020); Ctr. for Am.
Progress, Comment Letter on RFI, Document No. CFPB-2020-0026-0144
(Dec. 2, 2020); Consumer Bankers Ass'n, Comment Letter on RFI,
Document No. CFPB-2020-0026-0147 (Dec. 2, 2020).
\19\ 12 U.S.C. 5493(c)(2)(A), 5511(b)(2).
\20\ 12 CFR 1002.1(b).
---------------------------------------------------------------------------
II. Discussion
The Bureau interprets the ECOA and Regulation B prohibitions
against discrimination on the basis of ``sex'' to include
discrimination based on sexual orientation and/or gender identity. The
Bureau's interpretation is consistent with the Court's conclusion in
Bostock regarding sex discrimination under Title VII.\21\
---------------------------------------------------------------------------
\21\ See Bostock, 140 S. Ct. 1731.
---------------------------------------------------------------------------
It is well established that ECOA and Title VII are generally
interpreted consistently.\22\ Like Title VII,\23\ ECOA prohibits sex
discrimination (among other bases) and does not require that sex (or
other protected characteristics) be the sole or primary reason for an
action to be discriminatory.\24\ Like Title VII,\25\ ECOA applies to
sex discrimination against individuals, not just to situations where
all men or all women (or any other group of people with a common
protected characteristic) are discriminated against
[[Page 14365]]
categorically.\26\ Indeed, Regulation B clarifies that ECOA prohibits
discrimination based not only on the characteristics of an applicant
but also based on the characteristics of a person with whom an
applicant associates.\27\
---------------------------------------------------------------------------
\22\ See, e.g., Equal Credit Opportunity Act Amendments of 1976,
Public Law 94-239, 114 Stat. 246 (1976); S. Rep. 94-589, at 4-5
(1976), reprinted in 1976 U.S.C.C.A.N. 403. (``judicial
constructions of anti-discrimination legislation in the employment
field . . . are intended to serve as guides in the application of
this [Equal Credit Opportunity] Act''); Mercado-Garcia v. Ponce Fed.
Bank, 979 F.2d 890, 893 (1st Cir. 1992) (applying Title VII
standards in interpreting ECOA); Bhandari v. First Nat'l Bank of
Commerce, 808 F.2d 1082, 1100 (5th Cir. 1987) (same); Rosa v. Park
W. Bank & Tr. Co., 214 F.3d 213, 215 (1st Cir. 2000) (``look[ing] to
Title VII case law'' and reversing the dismissal of a sex
discrimination claim filed by a transgender person who alleged being
denied a loan application for failing to appear in clothing
consistent with the sex reflected on their identification cards).
See also Bostock, 140 S. Ct. at 1778 (Alito, S., dissenting)
(expressing the view that the decision ``is virtually certain to
have far-reaching consequences'' including, specifically, with
regard to ECOA).
\23\ Bostock, 140 S. Ct. at 1734 (holding that under Title VII,
``the plaintiff's sex need not be the sole or primary cause of the
employer's adverse action'').
\24\ See Official Staff Commentary, 12 CFR part 1002, supp. I, ]
4(a)-1) (``Disparate treatment on a prohibited basis is illegal
whether or not it results from a conscious intent to
discriminate.''); Saldana v. Citibank, Fed. Sav. Bank, No. 93 C
4164, 1996 WL 332451, at *2 (N.D. Ill. June 13, 1996) (``To
establish a case of lending discrimination under the [Fair Housing
Act] or the ECOA, [plaintiff] does not need to prove an actual
intent to discriminate on the part of [defendant], but she must show
that race played some role in [defendant's] decision.''). Moreover,
the 1994 Interagency Policy Statement on Discrimination in Lending
(Policy Statement) provides an illustration of disparate treatment
where the applicants' minority status was not the sole or primary
reason for the loan denial since adverse credit information was also
a factor in the decision. The illustration states that a nonminority
couple applied for an automobile loan. The lender found adverse
information in the couple's credit report. The lender discussed the
credit report with them and determined that the adverse information
(a judgment against the couple) was incorrect since the judgment had
been vacated. The nonminority couple was granted their loan. A
minority couple applied for a similar loan with the same lender.
Upon discovering adverse information in the minority couple's credit
report, the lender denied the loan application on the basis of the
adverse information without giving the couple an opportunity to
discuss the report. 59 FR 18266, 18268 (Apr. 15, 1994); Bureau of
Consumer Fin. Prot., Bulletin 2012-04 (Fair Lending) (Apr. 18,
2012), https://files.consumerfinance.gov/f/201404_cfpb_bulletin_lending_discrimination.pdf (the Bureau
expressed its concurrence with the Policy Statement).
\25\ Bostock, 140 S. Ct. at 1734 (finding that ``an employer
cannot escape liability [under Title VII] by demonstrating that it
treats males and females comparably as groups'').
\26\ While Title VII prohibits discrimination against ``any
individual,'' 42 U.S.C. 2000e-2(a)(1), and ECOA prohibits
discrimination against ``any applicant,'' 15 U.S.C. 1691(a), both
statutes refer to a singular person or applicant rather than a
group. ECOA defines an ``applicant'' as ``any person who applies to
a creditor directly for an extension, renewal, or continuation of
credit or applies to a creditor indirectly by use of an existing
credit plan for an amount exceeding a previously established credit
limit.'' 15 U.S.C. 1691a(b). Regulation B defines an ``applicant''
as ``any person who requests or who has received an extension of
credit from a creditor, and includes any person who is or may become
contractually liable regarding an extension of credit.'' 12 CFR
1002.2(e).
\27\ 12 CFR part 1002, supp. I, ] 2(z)-1 (providing that
``prohibited basis refers not only to characteristics--the race,
color, religion, national origin, sex, marital status, or age--of an
applicant (or officers of an applicant in the case of a corporation)
but also to the characteristics of individuals with whom an
applicant is affiliated or with whom the applicant associates'').
---------------------------------------------------------------------------
The Bureau believes that even though the term ``sex'' is not
defined in ECOA or Regulation B, the prohibitions against
discrimination on the basis of ``sex'' under ECOA and Regulation B are
correctly interpreted to include discrimination based on sexual
orientation and/or gender identity. As explained below and consistent
with the Court's analysis in the Bostock opinion, this conclusion can
be based on ``no more than the straightforward application of legal
terms with plain and settled meanings.'' \28\ But, even if it were not
so straightforward, the Bureau would still reach the same conclusion
based on its expertise in interpreting ECOA and Regulation B. 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.
---------------------------------------------------------------------------
\28\ Bostock, 140 S. Ct. at 1743.
---------------------------------------------------------------------------
First, under ECOA and Regulation B, as under Title VII, sexual
orientation discrimination and gender identity discrimination
necessarily involve consideration of sex. For example, if a creditor
declines the loan application of a male applicant on the basis that he
is attracted to men, the creditor discriminates against him for traits
or actions it tolerates in female applicants; further, this
discrimination is motivated, at least partly, by the applicant
``failing to fulfill traditional sex stereotypes.'' \29\ Or, if a
creditor declines the loan forbearance application of a transgender
person who was identified as male at birth but who now identifies as
female, but approves the application of an otherwise similarly-situated
applicant who was identified as female at birth and now continues to
identify as female, the creditor discriminates against a person
identified as male at birth for traits or actions that it tolerates in
an applicant identified as female at birth. In these examples, the
individual applicant's ``sex plays an unmistakable and impermissible
role'' \30\ in the credit decisions and thus constitutes discrimination
on the basis of sex in violation of ECOA and Regulation B. The Bureau's
interpretation is consistent with the Supreme Court's conclusion in
Bostock that ``it is impossible to discriminate against a person for
being homosexual or transgender without discriminating against that
individual based on sex.'' \31\
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\29\ Id. at 1742.
\30\ Id. at 1741-42.
\31\ Id. at 1741. Notwithstanding differences in the ways that
Title VII and ECOA phrase their prohibition against sex
discrimination, the Bureau interprets ECOA and Regulation B to
incorporate the Bostock principles and reasoning with respect to the
recognition of sexual orientation discrimination and gender identity
discrimination as sex discrimination under ECOA and Regulation B.
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Second, under ECOA and Regulation B, as under Title VII, sex does
not have to be the sole or primary reason for an action to be
discriminatory.\32\ For example, when a creditor rejects an applicant
on the basis of their being gay or transgender, two causal factors may
be in play--both the individual's sex and something else (the sex to
which the individual is attracted or with which the individual
identifies).\33\ Under ECOA and Regulation B, if a creditor would not
have rejected a credit applicant or discouraged a prospective applicant
but for that individual's sex, the causation standards are met, and
liability may attach.\34\
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\32\ See id. at 1744; 59 FR 18266, 18268 (Apr. 15, 1994).
\33\ See id. at 1742.
\34\ See id. at 1742; see also Rosa, 214 F.3d at 215.
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Third, ECOA and Regulation B, like Title VII, apply to sex
discrimination against individuals, not just to situations where all
men or all women are discriminated against categorically.\35\ Further,
ECOA and Regulation B, like Title VII, work to protect individuals of
all sexes from discrimination, and do so equally.\36\ For example, a
creditor who rejects an application from a woman because the loan
officer regards her as insufficiently feminine, and also rejects an
application from a man because the loan officer regards him as being
insufficiently masculine, may treat men and women as groups more or
less equally. But in both scenarios, the creditor has discriminated
against an applicant in violation of ECOA and Regulation B by rejecting
an individual applicant in part because of sex. Instead of avoiding
ECOA exposure, this creditor ``doubles it.'' \37\ It is no defense for
a creditor to argue that it is equally happy to reject male and female
applicants who are gay or transgender because each instance of
discriminating against an individual applicant because of that
individual's sex is an independent violation of ECOA and Regulation
B.\38\
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\35\ See Bostock, 140 S. Ct. at 1740-41; see also Rosa, 214 F.3d
at 215 (finding a potential ECOA claim where the plaintiff ``did not
receive the loan application because he was a man, whereas a
similarly situated woman would have received the loan
application'').
\36\ See Bostock, 140 S. Ct. at 1741.
\37\ See id. at 1741.
\38\ See id. at 1742-43.
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Last, the Bureau interprets the ECOA and Regulation B prohibition
against discrimination on the basis of ``sex'' to also include
discrimination motivated by perceived nonconformity with sex-based or
gender-based stereotypes, including those related to gender identity
and/or sexual orientation, as well as discrimination based on an
applicant's associations. An example of discriminatory sex-based or
gender-based stereotyping occurs if a small business lender discourages
a small business owner appearing at its office from applying for a
business loan and tells the prospective applicant to go home and change
because, in the view of the creditor, the small business customer's
attire does not accord with the customer's gender.\39\ The Bureau's
interpretation regarding discriminatory stereotyping is consistent with
multiple court decisions \40\ and with the Court's Bostock
decision.\41\ The Bureau's
[[Page 14366]]
interpretation regarding associational discrimination is similarly
consistent with the Court's reasoning in Bostock regarding how
discrimination based on the sex, including sexual orientation and/or
gender identity, of the persons with whom the individual associates is
prohibited under Title VII.\42\ A creditor engages in such
associational discrimination if it, for example, requires a person
applying for credit who is married to a person of the same-sex to
provide different documentation of the marriage than a person applying
for credit who is married to a person of the opposite sex. The Bureau's
interpretation is consistent with the principle, applied by Federal
agencies for decades, that credit discrimination on a prohibited basis
includes discrimination against an applicant because of the protected
characteristics of individuals with whom they are affiliated or
associated (e.g., spouses, domestic partners, dates, friends,
coworkers).\43\ Moreover, the Bureau has previously established that a
creditor may not discriminate against an applicant because of that
person's personal or business dealings with members of a protected
class, because of the protected class of any persons associated with
the extension of credit, or because of the protected class of other
residents in the neighborhood where the property offered as collateral
is located.\44\
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\39\ See, e.g., Rosa, 214 F.3d at 214-15.
\40\ See EEOC v. Boh Bros. Constr. Co., 731 F.3d 444, 457-58
(5th Cir. 2013) (en banc); Glenn v. Brumby, 663 F.3d 1312, 1314,
1320-21 (11th Cir. 2011); Barnes v. City of Cincinnati, 401 F.3d
729, 735-37 (6th Cir. 2005); Nichols v. Azteca Rest. Enterprises,
Inc., 256 F.3d 864, 870, 874-75 (9th Cir. 2001); Rosa, 214 F.3d at
215.
\41\ See Bostock, 140 S. Ct. at 1742-43 (stating that an
employer who fires employees ``for failing to fulfill traditional
sex stereotypes doubles rather than eliminates Title VII liability,
an employer who fires [employees] for being gay or transgender does
the same'').
\42\ See id. at 1748 (``So, for example, when it comes to
homosexual employees, male sex and attraction to men are but-for
factors that can combine to get them fired. The fact that female sex
and attraction to women can also get an employee fired does no more
than show the same outcome can be achieved through the combination
of different factors. In either case, though, sex plays an essential
but-for role.'').
\43\ See Equal Credit Opportunity; Revision of Regulation B;
Official Staff Commentary, 50 FR 48018, 48049 (Nov. 20, 1985)
(providing that discrimination on a ``prohibited basis refers not
only to characteristics--the race, color, religion, national origin,
sex, marital status, or age--of an applicant (or officers of an
applicant in the case of a corporation) but also to the
characteristics of individuals with whom an applicant is affiliated
or with whom the applicant associates,'' or because of the
characteristics of people with whom an applicant has ``personal or
business dealings''); 59 FR 18266, 18268 (Apr. 15, 1994) (stating
that ``A lender may not discriminate on a prohibited basis because
of the characteristics of: [a] person associated with a credit
applicant (for example, a co-applicant, spouse, business partner, or
live-in-aide); or [t]he present or prospective occupants of the area
where property to be financed is located.''); 76 FR 79442, 79473
(Dec. 21, 2011); 81 FR 25323, 25325 (Apr. 28, 2016); Official Staff
Commentary, 12 CFR part 1002, supp. I, ] 2(z)-1).
\44\ Official Staff Commentary, 12 CFR part 1002, supp. I, ]
2(z)-1).
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For these reasons, the ECOA and Regulation B prohibition against
discrimination on the basis of ``sex'' includes discrimination or
discouragement based on sexual orientation and/or gender identity,
including but not limited to discrimination based on actual or
perceived nonconformity with sex-based or gender-based stereotypes and
discrimination based on an applicant's associations.
III. Legal Authority
This interpretive rule is issued under the Bureau's authority to
interpret the ECOA and Regulation B, including under section 1022(b)(1)
of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which
authorized guidance as may be necessary or appropriate to enable the
Bureau to administer and carry out the purposes and objectives of
Federal consumer financial laws.\45\
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\45\ 12 U.S.C. 5512(b)(1). The relevant provisions of the ECOA
and Regulation B form part of Federal consumer financial law. 12
U.S.C. 5481(12)(D), (14).
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By operation of the ECOA section 706(e), no provision of ECOA
sections 701(a), 704(b), 706(a), or 706(b) imposing any liability
applies to any act done or omitted in good faith in conformity with
this interpretive rule, notwithstanding that after such act or omission
has occurred, the rule is amended, rescinded, or determined by judicial
or other authority to be invalid for any reason.\46\
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\46\ 15 U.S.C. 1691(e).
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IV. Effective Date
Because this rule is solely interpretive, it is not subject to the
30-day delayed effective date for substantive rules under section
553(d) of the Administrative Procedure Act.\47\ Therefore, this rule is
effective on March 16, 2021, the same date that it is published in the
Federal Register.
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\47\ 75 U.S.C. 553(d).
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V. Regulatory Matters
As an interpretive rule, this rule is exempt from the notice-and-
comment rulemaking requirements of the Administrative Procedure
Act.\48\ Because no notice of proposed rulemaking is required, the
Regulatory Flexibility Act does not require an initial or final
regulatory flexibility analysis.\49\ The Bureau also has determined
that this interpretive rule does not impose any new or revise any
existing recordkeeping, reporting, or disclosure requirements on
covered entities or members of the public that would be collections of
information requiring approval by the Office of Management and Budget
under the Paperwork Reduction Act.\50\
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\48\ 5 U.S.C. 553(b).
\49\ 5 U.S.C. 603(a), 604(a).
\50\ 44 U.S.C. 3501-3521.
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Pursuant to the Congressional Review Act,\51\ the Bureau will
submit a report containing this interpretive rule and other required
information to the U.S. Senate, the U.S. House of Representatives, and
the Comptroller General of the United States prior to the rule's
published effective date. The Office of Information and Regulatory
Affairs has designated this interpretive rule as not a ``major rule''
as defined by 5 U.S.C. 804(2).
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\51\ 5 U.S.C. 801 et seq.
Dated: March 5, 2021.
David Uejio,
Acting Director, Bureau of Consumer Financial Protection.
[FR Doc. 2021-05233 Filed 3-15-21; 8:45 am]
BILLING CODE 4810-AM-P
