The CFPB and DOJ withdrew 2023 guidance that had explicitly discouraged lenders from discriminating against immigrants and non-citizens. The Biden-era guidance clarified how immigration or citizenship status could be considered without producing unlawful discrimination, and aimed to strengthen enforcement of fair-lending laws. Critics say the withdrawal weakens protections and could encourage lenders to adopt exclusionary practices, while DOJ officials say the guidance was "ideologically-driven."
CFPB and DOJ Withdraw Guidance That Barred Lenders From Discriminating Against Immigrants
The seal of the Consumer Financial Protection Bureau (CFPB) is seen at their headquarters in Washington, D.C., U.S., May 14, 2021. REUTERS/Andrew Kelly
WASHINGTON, Jan 12 (Reuters) - The U.S. Consumer Financial Protection Bureau (CFPB) and the Department of Justice (DOJ) on Monday withdrew a 2023 joint guidance that had explicitly discouraged lenders from discriminating against immigrants and non-citizens. Critics say the move could weaken legal protections for immigrant borrowers and make it harder for them to access credit.
Background
Former President Joe Biden issued the guidance in 2023 to clarify how existing federal civil rights and fair-lending laws apply when lenders consider an applicant's immigration or citizenship status. The guidance said lenders could, in some lawful circumstances, consider immigration or citizenship status but could not rely on it as the sole basis for denying credit or use it in a way that produced bias or discrimination.
Potential Impact
While federal law already bars discriminatory lending practices, the guidance was intended to spell out enforcement expectations and reduce the likelihood that lenders would use immigration-related criteria as a pretext to exclude borrowers. Its withdrawal removes that explicit clarification and, according to some legal observers, could encourage lenders to adopt policies that disproportionately affect immigrants.
What Officials Say
Lori Sommerfield, a partner in Troutman Pepper Locke's consumer financial services practice, said the reversal "really underscores the Trump administration's two key priorities: a harder line on immigration and a continued effort to scale back enforcement of the federal fair lending laws."
Assistant Attorney General Harmeet Dhillon, who leads the DOJ's Civil Rights Division, said the Biden-era guidance had been "ideologically-driven," and that withdrawing it restores alignment with established federal civil rights law.
Concerns From Legal Experts
Former CFPB officials and consumer finance lawyers warned the withdrawal carries an anti-immigrant subtext that aligns with broader Trump administration efforts to tighten immigration controls. Kris Kully, a partner at Mayer Brown, said the change could be seen as a "wink and a nod" to lenders, signaling greater tolerance for policies that disadvantage immigrant applicants.
Last April, administration actions included invalidating Social Security numbers issued while a person was under Temporary Protected Status. Observers say a lender could implement a blanket requirement for an active Social Security number to apply for credit—an approach that mirrors the administration's stance but could still violate anti-discrimination laws if used as a pretext to deny loans to immigrants.
"That may be all part of the same thrust to just make it unpalatable and unaffordable, and in other ways just difficult to stay," Kully said.
(Reporting by David Hood-Nuño; Editing by Kat Stafford and Rosalba O'Brien)
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