Disparate Impact

Disparate Impact: Liz Goes Loony

In full-spittle mode, Lizzie Warren let the hysterics and flop-sweat fly last week in an Op-Ed piece for the Wapo, in which she warned that if the SCOTUS strikes down “disparate impact” in the context of fair lending laws, the space-time continuum will be ripped to shreds.

The Supreme Court appears poised to continue its systematic assault on our core civil rights laws. After gutting the Voting Rights Act just two years ago, the court set its sights on our country’s fair housing laws when it heard oral arguments today in Texas Department of Housing and Community Affairs v. The Inclusive Communities Project. As with the voting rights decision, a decision limiting the scope of the housing laws would ignore the will of Congress and undermine basic principles of racial equality. But there is even more at stake in the fair housing case, because the wrong decision would reduce economic opportunities for working families and raise the risk of another financial crisis.

After correctly pointing out the inconvenient truth that proving actual discrimination is a bitch, she uses that “high bar” as a reason to lower the bar.

Intentional discrimination cases are notoriously hard to prove because they require evidence of a person’s state of mind. As a result, most housing segregation cases are brought on the second basis: disparate impact. Those cases are no easy lift either. To find a disparate-impact violation, a court must conclude that a challenged practice has a disproportionately negative effect on otherwise similar racial groups and that there is no nondiscriminatory explanation for the practice. Despite that high bar, disparate-impact claims have been the main tool for attacking some of the most persistent practices contributing to housing segregation.

“No easy lift” my petite, firm tukus. If “disparate impact” is a “high bar,” then her idea of a prototypical NBA center must be Verne Troyer. As Princess Fauxcohontas understands well, outfits like her evil spawn the CFPB, HUD and the DOJ have used regression analysis to find discrimination in places even the starship Enterprise has not yet gone. Because it’s so expensive to wage battles on a field where figures don’t lie, but liars figure, the accursed accused have generally permitted themselves to be bullied into settlements not because they think the claims against them are warranted but on a pure cost-benefit basis. It’s cheaper to settle than to wage war with the fiscally unaccountable.

She also touts the fact that 17 states have joined the Obama administration in supporting disparate impact. That leaves almost twice as many states with their middle fingers raised at Lizzie. If she’s arguing that there’s majority support for the doctrine as a matter of popular opinion (which, I suppose in her intellectually dishonest universe, trumps sound legal reasoning), then she screwed the pooch in that paragraph.

Undercutting our fair housing laws also would increase the risk of another financial crisis. In the wake of the 2008 economic collapse, the Justice Department found that several big banks and other mortgage lenders had violated the Fair Housing Act’s disparate-impact standard by steering borrowers of color into more expensive mortgages than white borrowers with similar financial profiles. While lenders profited in the short term, these families were unable to keep up with their payments when housing prices fell, contributing to the chain reaction throughout the financial system. As the crisis demonstrated, we need stronger fair housing laws, not weaker ones that allow lenders to return to the risky — but lucrative — practices that set the stage for the last crash.

That’s been her (and the CFPB’s) consistent meme over the past seven years: the 2008 financial meltdown was caused by a catastrophic failure of consumer protection. Hubris, greed at all levels of society (including the vaunted consumer level), and federal government policies that encouraged putting gardeners from Guadalajara in California McMansions had absolutely nothing to do with it.

Rather than waste further time with that tiresome tool, read an interview with Ballard Spahr’s Mike Skojec. Mike’s insights are much less fevered and much more cogent. Then again, he’s not making a run for higher office on a platform based upon the truth of the adage that you can fool most of the people some of the time and some of the people all of the time.

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