The Office of the Comptroller of the Currency (“OCC”) has formally revised its fair lending examination procedures, announcing in Bulletin 2025-16, issued on July 14, 2025, that it has eliminated all references to disparate impact liability from the “Fair Lending” section of the Comptroller’s Handbook. This revision marks a major shift in how the federal agency supervises banks with respect to anti-discrimination laws.
Disparate impact refers to a legal theory under which a neutral policy or practice, regardless of discriminatory intent, produces a negative and unequal effect on a protected group. Historically, this concept has been central to enforcement under the Age Discrimination in Employment Act, the Equal Credit Opportunity Act and the Fair Housing Act. However, with the changes outlined in the Bulletin, OCC examiners are now directed to cease analyzing, as part of future fair lending risk assessments, information related to (i) a bank’s exposure to disparate impact risk, (ii) internal risk analysis tied to disparate impact and (iii) policies or procedures used to assess disparate impact risk. According to the Bulletin, this applies broadly to the supervision of all institutions within the OCC’s jurisdiction, including community banks.
The policy shift stems directly from Executive Order 14281, Restoring Equality of Opportunity and Meritocracy, issued by President Trump on April 23, 2025, which mandates that all federal agencies phase out the use of disparate impact across regulatory and enforcement functions. The Executive Order asserts that the legal framework surrounding disparate impact has historically pressured businesses into race-conscious decision-making, which it characterizes as undermining merit-based practices and as being in conflict with constitutional equal protection principles. In response, the OCC is now stepping back from using disparate impact as a basis for regulatory scrutiny under its fair lending framework.
While federal banking regulators still prohibit intentional discrimination in lending, the OCC’s withdrawal from disparate impact supervision will narrow the focus of its future fair lending risk examinations. As a result, OCC-supervised banks will likely see reduced compliance burdens moving forward. At the time of publishing this post, neither the Federal Reserve nor the Federal Deposit Insurance Corporation (“FDIC”) had issued any updated guidance or statement regarding the use of disparate impact analysis in fair lending matters. We will continue to monitor statements from the Federal Reserve and FDIC and will update this post in the event either or both agencies provide any statements regarding the use of disparate impact analysis in fair lending matters.
If you have any questions concerning the above, please contact your attorney at Vedder Price or one of the authors.