CFPB’s proposed credit access rule would bring redlining back

Last month, the Consumer Financial Protection Bureau — led by Project 2025 architect Russ Vought — proposed a rule that would effectively neuter the agency’s ability to stop discriminatory lending. Quietly released with only a 30-day comment window, the CFPB’s proposal would upend decades of fair lending protections. It would also make modern redlining far easier to carry out — and far harder to challenge. The consequences would fall first and hardest on Black communities. Homeownership, small-business growth, education and intergenerational stability all depend on fair access to credit.

Redlining never truly went away — it has evolved with the times. For example, in Los Angeles, federal investigators uncovered a pattern that Black and Latino families had long suspected: City National Bank, one of the region’s largest financial institutions, was quietly cutting them out of economic opportunity. From 2017 to 2020, the bank opened nearly all its branches in white neighborhoods, steered its marketing to white borrowers, and made so few mortgage loans in Black and Latino communities that the Justice Department described the gap as “plain and measurable.” The case ended with a $31 million settlement — the largest modern redlining agreement in history. Birmingham told a similar story. Fairway Independent Mortgage Corporation avoided lending in Black neighborhoods entirely. In New Jersey, OceanFirst Bank steered opportunity into white suburbs while starving Black and Latino communities of credit, prompting a $15.1 million settlement.

None of these lenders hung up “Whites Only” signs. No one used a slur or an overtly discriminatory checklist. The discrimination was visible only in the outcomes — the statistical patterns that federal law allows investigators to examine.

Congress recognized that the way discrimination manifested itself had changed from the Jim Crow era when it passed the Equal Credit Opportunity Act in 1974. Discrimination no longer always announces itself. Sometimes it operates through data models, branch placement or marketing algorithms. That is why courts and regulators have relied on a simple, powerful framework for decades: disparate impact. If a lender’s policies disproportionately harm protected groups — even without explicit intent — the law treats that as evidence of discrimination.

Without that tool, modern discrimination becomes untouchable. The CFPB now proposes to erase disparate impact entirely. Under the new rule, discrimination would exist only if a lender essentially confesses to it. That defies not just logic, but the lived experience of millions. Nationally, Black borrowers are denied mortgages at twice the rate of white borrowers — and those disparities are not simply misfortunes. They are math. And they are exactly what disparate impact allows us to detect. 

But the rule goes even further. It narrows the definition of “discouragement” so dramatically that lenders would be punished only for explicit, intentional discriminatory statements. Modern discrimination rarely works that way. It lives in the quiet decisions: closing branches in Black neighborhoods, targeting predatory loan products to vulnerable families, or running “race-neutral” algorithms that funnel borrowers of color into higher-cost credit. This rule gives all of that room to grow.

Then comes another damaging blow: the effective elimination of the Special Purpose Credit Program — one of the few tools proven to expand homeownership and small-business access for communities long shut out of financial markets. These programs were designed by Congress to counteract historic exclusion. They help first-generation homebuyers. They offer lower interest rates for borrowers with strong incomes, but credit scores that were suppressed by systemic inequity. They close gaps that the market, left to its own devices, will never fix.

The CFPB now proposes to restrict or prohibit the very programs that work best.

There is no economic justification for these changes. In fact, the bureau explicitly acknowledges it lacks the data to quantify the costs or benefits. Yet the rule advances anyway — shrinking accountability and expanding the freedom of lenders at the exact moment borrowers face rising interest rates, tightening credit markets and widening racial disparities.

Modern redlining thrives when the law looks the other way. At a time when millions of families are struggling to keep up with housing costs and a generation of young people are fighting for economic stability, these changes will make economic growth even harder. The question now is: Are we going to allow it?

The CFPB has given the public just 30 days to respond, but there is still time to act. Individuals and organizations must submit public comments opposing the rule and make their objections part of the official record. Leaders in positions of authority — business executives, mayors, governors, attorneys general, financial services leaders and civil rights commissions — should speak out publicly and behind closed doors, clearly and unequivocally, about the profoundly negative consequences this rollback will have for families, communities, and the broader economy. Now is the moment to make this proposed rule impossible to ignore.

Modern redlining is not theoretical, and it is no longer the maps from the 1930s. It is a modern-day practice. And unless we continue to speak up and highlight inequities, this rule will become one of the most damaging economic setbacks in a generation. Economic opportunity requires rules that protect fairness — not ones designed to erase it.