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.