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CFPB files amicus brief in U.S. Supreme Court ECOA case

June 11, 2015 / Source: Ballard Spahr

The Supreme Court will be reviewing the decision of the U.S. Court of Appeals for the Eighth Circuit which affirmed the district court’s ruling that the ECOA did not provide a cause of action to the plaintiffs who alleged that they were required to sign guaranties of several loans made by the bank to a company their husbands controlled.  The plaintiffs claimed that by requiring the guaranties, the bank violated the ECOA provision that prohibits discrimination by a creditor against an “applicant” on the basis of marital status.  The Eighth Circuit ruled that Regulation B’s definition of “applicant,” which includes a guarantor, was not entitled to deference because it contradicted the ECOA’s unambiguous text.

The CFPB has rulemaking and enforcement authority under the ECOA.  In its amicus brief, the CFPB argues that the Regulation B definition is entitled to “great deference” underChevron U.S.A. Inc. v. NRDC, Inc.  According to the CFPB, deference is “especially appropriate” because Congress has repeatedly amended the [ECOA] without disturbing the [Federal Reserve] Board’s longstanding interpretation of ‘applicant.’”  It further argues that Regulation B’s definition of “applicant” is consistent with the ECOA’s text and serves the ECOA’s purposes by protecting spouses who are asked to sign guarantees based solely on marital status from discriminatory harm.