Trump Executive Order Rejects Disparate Impact Under ECOA and Civil Rights Laws

President Trump signed an Executive Order eliminating the federal government's use of disparate-impact liability, a legal theory that finds discrimination based on statistical disparities—even without intent or explicit discriminatory policies. The Order argues that disparate impact violates the Equal Protection Clause by encouraging race-conscious decision-making to rebalance outcomes, rather than focusing on individual merit.

Key implications for civil rights and financial regulation include:

• Disparate impact enforcement under the Equal Credit Opportunity Act (ECOA) and Title VI is to be deprioritized.

• The Attorney General is directed to repeal or amend regulations that rely on disparate-impact analysis.

• Ongoing investigations, lawsuits, and consent judgments based on disparate impact are to be reviewed and potentially modified or dismissed.

The Order frames this shift as a return to a merit-based system aligned with the original goals of the Civil Rights Movement—ensuring equal treatment without regard to race and opposing group-based outcome mandates.