As the country's high court tackles the issue of disparate impact -- the idea that a policy or practice can have a discriminatory effect, even if there is no intent to create bias -- legal briefs both for and against the theory are likely to pour in.
The Mortgage Bankers Association, for one, has filed a friend of the court brief spelling out its stance on disparate impact as a Fair Housing Act violation. The group believes the focus should be on eliminating deliberate discrimination against borrowers, not on whether a sub-sect of consumers is unable to secure financing even after objective underwriting has been used. "The recent financial crisis has confirmed the importance of using sensible, risk-based lending standards that are applied fairly even though they may not result in outcomes by groups that are proportional to the group's share of the population," MBA wrote in its New Jersey v. Mt. Holly Gardens Citizens Action brief.
Bankers worry about being exposed to costly litigation for behavior that was never intended to discriminate. Consumer advocates, though, support disparate impact as a way to avoid a particular demographic being excluded.