Regulatory body OCC relaxes disparate impact supervision and evaluation standards
In a significant shift, the Office of the Comptroller of the Currency (OCC) has removed disparate impact liability from its fair lending guidelines for banks under its supervision. This decision follows President Donald Trump's April executive order and is effective as of July 2025, as outlined in Bulletin 2025-16.
Under the new guidance, OCC examiners will no longer examine or assess banks on disparate impact risk, internal disparate-impact analyses, or disparate impact risk assessment processes. However, the OCC continues to require banks to provide fair access to financial services, treat customers fairly, and comply with all applicable laws and regulations.
The OCC's supervisory activities remain focused on conducting fair lending risk assessments, analyzing Home Mortgage Disclosure Act (HMDA) data for evidence of disparate treatment, carrying out risk-based fair lending examinations, and taking appropriate enforcement or supervisory action if any evidence of disparate treatment is found.
This change applies to national banks, federal savings associations, and OCC-supervised community banks. The OCC has started removing all disparate impact references from the Comptroller’s Handbook and related supervisory materials.
It is essential for banks to stay aware of potential differing approaches by other regulators and states, which may still consider disparate impact in their fair lending examinations.
This move represents a significant shift in the OCC's supervisory approach, aiming to reduce compliance burdens for banks supervised by the OCC while still enforcing fair lending laws. It is consistent with the executive order issued under the Trump administration, which called for agencies to eliminate the use of disparate impact liability in all contexts to avoid violating the Constitution, Federal civil rights laws, and basic American ideals.
The Trump administration has pivoted from the Biden administration's regulations and policies to focus more on "free-market competition." This change is reflected in the proposed budget, which allocates $26 million for the state/local Fair Housing Assistance Program and $55 million for HUD's Office of Fair Housing and Equal Opportunity, cutting $31 million from its current budget. The present administration has also proposed a 44% cut to HUD programs in FY26 budget, including the elimination of the local Fair Housing Initiatives Program.
The Department of Housing and Urban Development under the Trump administration has eliminated the Biden-era interagency policies designed to address racial bias in lending. The order directed the U.S. Attorney General and all federal agencies, including the Equal Employment Opportunity Commission, to repeal or amend regulations pertaining to disparate impact liability.
This decision by the OCC is part of a broader trend under the Trump administration to reduce regulations and focus on free-market principles in financial institutions. Banks are advised to stay informed about these developments to ensure compliance with changing regulations.
In the context of this text, here are the two sentences that contain the given words:
- The OCC's supervisory activities remain focused on business activities such as conducting fair lending risk assessments, which are regulated by policy-and-legislation and enforced through politics.
- General news sources report that the Trump administration has pivoted from the Biden administration's regulations and policies, focusing more on "free-market competition" in finance and other business sectors, as reflected in the proposed budget changes.
