The Office of the Comptroller of the Currency (OCC) recently announced a stop to fair lending examinations of the banks it supervises until early 2026, in the most recent change in the federal government’s policy shift away from fair lending enforcement and supervision.
As reported by Bloomberg Law, an internal OCC email from Chief National Bank Examiner Jay Gallagher announced that the agency would “defer” all fair lending exams through January 31, 2026, while all pending fair lending reviews would be halted as soon as possible. Examiners must also consult with their supervisors about how to handle existing matters requiring attention related to fair lending. The email allegedly stated that the pause is occurring while the Department of Justice and Department of Housing and Urban Development (HUD) reassess priorities and the OCC reorganizes its exam teams.
This reported halt follows other changes to fair lending enforcement, both at the OCC and at other federal agencies. In response to an April executive order (EO) declaring it federal policy to eliminate the use of disparate impact liability “in all contexts to the maximum degree possible,” the OCC stopped using disparate impact theory in fair lending reviews. HUD announced in September that its Office of Fair Housing and Equal Opportunity (FHEO) staff should “prioritize cases involving facially discriminatory conduct” and rescinded several guidance documents, including an August 2016 document titled, “Proving Disparate Impact in Fair Housing Cases After Inclusive Communities.” Further, in the midst of the federal government shutdown, HUD issued reduction-in-force notices (RIFs) to hundreds of staff, with the most dramatic cuts hitting FHEO staff. A temporary restraining order has enjoined the RIFs for now.
With supervision and enforcement priorities changing at the federal level, state attorneys general and regulators may step in to fill the fair lending void by enforcing their own fair lending statutes. States may also continue to enforce federal laws impacting fair lending – although states’ ability to bring disparate impact claims may be impacted by a review mandated by the April EO as to whether federal authorities preempt state laws that impose disparate impact liability based on a federally protected characteristic.