On December 9, 2025, the US Department of Justice (DOJ) issued a final rule eliminating “disparate-impact” liability from its Title VI regulations. The final rule rescinds portions of DOJ’s Title VI regulations that allowed disparate-impact claims (i.e., challenges to neutral policies with disproportionate effects on protected groups) and aligns DOJ’s enforcement approach with the administration’s broader campaign to curtail disparate-impact liability across federal agencies.
This rule is the latest move by the Trump administration to eliminate disparate-impact claims and end what it calls “illegal preferences and discrimination,” and it will have significant legal and compliance ramifications for recipients of federal funding and a variety of industries, including financial services companies.
Disparate-impact rule eliminated
Title VI of the 1964 Civil Rights Act prohibits discrimination on the basis of race, color or national origin in programs and activities receiving federal financial assistance. Disparate impact refers to policies or practices that are neutral on their face but end up having a disproportionate adverse effect on a protected group, even without discriminatory intent. For more than 50 years, DOJ’s Title VI regulations recognized disparate-impact liability – meaning a funding recipient could be found in violation if its policies “in practice” caused unequal outcomes, unless justified by business necessity. The new DOJ rule repeals those provisions, ensuring that only intentional discrimination violates Title VI from now on. In DOJ’s words, the update “ensures that recipients of federal funding will be judged on their actual conduct, not on statistical outcomes or circumstances beyond their control.”
Implications for financial services
This latest action dovetails with recent moves by federal financial regulators to roll back disparate-impact liability in lending laws. In April 2025, President Trump signed Executive Order 14281, directing federal agencies to “eliminate the use of disparate-impact liability in all contexts to the maximum degree possible.” Federal banking regulators quickly followed suit: The Office of the Comptroller of the Currency (OCC), for example, removed references to disparate impact from its supervisory guidance and even announced a temporary halt to fair-lending examinations of national banks until early 2026.
On November 13, 2025, the Consumer Financial Protection Bureau (CFPB) issued a proposed rule to amend Regulation B (which implements the Equal Credit Opportunity Act, or ECOA) by removing language that supports disparate-impact claims under ECOA. The CFPB’s proposal reasons that, under the best reading of the law, ECOA does not allow disparate-impact liability. As a result, the CFPB proposes to delete the existing regulatory text that had long suggested lenders could be liable for practices with discriminatory effects.
DOJ’s Title VI overhaul is, therefore, part of a broader pattern initiated by the Trump administration. These actions by the OCC and CFPB, together with DOJ’s new rule, underscore a consistent policy of focusing enforcement of antidiscrimination laws on intentional discrimination, not unintentional effects.
For financial institutions, the risk of federal enforcement actions based on unintentional disparate impacts has receded. Going forward, DOJ-led civil rights probes into banking practices will require evidence suggesting intentional bias or discriminatory treatment. The same is true if the CFPB finalizes its Regulation B changes. This clearer, narrower standard can translate into greater legal certainty for lenders following neutral policies. However, financial institutions should remain vigilant, as intentional discrimination remains strictly unlawful. Further, there is no guarantee that a future administration will not reverse these changes.
Crucially, the federal pullback on disparate impact does not preempt state antidiscrimination laws. Financial institutions should, therefore, stay mindful of state-level compliance: They may need to meet stricter requirements in certain jurisdictions, even as federal oversight eases.
Conclusion
DOJ’s elimination of Title VI disparate-impact liability represents a recalibration of civil rights enforcement toward an intent-only paradigm. For the financial services industry, this regulatory shift brings a mixed outlook. On one hand, federal compliance and enforcement pressures related to unintentional disparities are being dialed back, which might reduce uncertainty and legal exposure at the federal level for facially neutral policies. On the other hand, banks and lenders must navigate a more complex landscape where state regulators and courts may still police disparate impacts.
Financial institutions should adapt their compliance strategies to this new reality, ensuring strong safeguards against intentional discrimination and keeping an eye on outcome disparities as needed for state law compliance and reputation management.