A three-judge panel in the Seventh Circuit on Thursday reversed a district court judge’s ruling and allowed a Consumer Financial Protection Bureau lawsuit against a notorious non-bank mortgage company accused of rampant racial discrimination to go forward. The ruling preserves the ability for regulatory enforcers to use the Equal Credit Opportunity Act (ECOA) the way it traditionally has been used in its 50 years of existence: to discourage any discriminatory activity by lenders, even if it occurs before a borrower turns in an application for credit. “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,” wrote Judge Diane Sykes, the chief judge of the Seventh Circuit and a George W.
Bush appointee. The other two judges on the panel were also appointed by Republicans: Kenneth Ripple (a Reagan appointee) and Ilana Rovner (George H.W.
Bush). There was concern last year, , that the Supreme Court’s imminent ruling in , reversing the so-called “Chevron deference” that courts had given to administrative agencies interpreting federal statutes, might hinder the CFPB’s case and hobble the ECOA. But though the Court did reverse Chevron last month, the Seventh Circuit judges still reached a conclusion protecting ECOA, simply by reading the legislation.
It’s notable that, in a time where conservative judges are rewriting regulatory rules to suit their ideological end.
