Executive Order 14281: The End of Fair Lending Law Enforcement Through Use of the Disparate Impact Legal Theory?

Hosts Dean Stockford and Len Suzio welcome Lori Sommerfield, a partner at Troutman Pepper Locke LLP, to discuss and explain President Trump’s Executive Order 14281 (April 23, 2025), which directs federal agencies to limit use of the disparate impact theory in fair lending enforcement and to review existing guidance, pending matters, and consent orders that leverage that theory.

The federal banking agencies are removing disparate impact references in their examination manuals and shifting toward intentional discrimination theories, while  use of the disparate impact theory by state authorities and private litigants remain risks. Banks and financial services companies should continue to review policies and procedures for potential disparate impact, conduct rigorous fair lending monitoring and testing, and prepare for potential future shifts in enforcement.

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