The Federal Reserve Board’s Regulation B implements the Equal Credit Opportunity Act, and prohibits creditors from discouraging, on a prohibited basis, applicants or prospective applicants from making or pursuing an application for credit. In 2020, the CFPB, who now enforces the regulation, brought an enforcement action alleging a lender “discouraged black prospective applicants from applying for mortgage loans with Townstone, in violation of Regulation B, by making, over a period of years, several statements on their long-form commercial advertisement radio show.” A district court dismissed the action, finding Regulation B exceeded the statute, as the ECOA “does not authorize the imposition of liability for the discouragement of prospective applicants.”
The Seventh Circuit unanimously reversed, holding that “When the text of the ECOA is read as a whole, it is clear that Congress authorized the imposition of
liability for the discouragement of prospective applicants. Regulation B’s prohibition on discouraging prospective applicants is therefore consistent with the ECOA’s text and purpose.” Of note, in its analysis, the Court did not grant any deference (even under Skidmore) to the agency. It explained:
This case was litigated before the Supreme Court’s decision in Loper Bright Enterprises v. Raimondo, No. 22-451, 603 U.S. ___ (2024). Our decision
today takes into account that Loper Bright overruled Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984). We approach this case as presenting a question of statutory interpretation subject to our de novo review.
