There’s Really No Argument Against Disparate Impact

Posted by Alan Jenkins on January 6, 2015

Open, inclusive communities free of discrimination are critical to our national success. But despite the progress we’ve made as a nation, significant obstacles to fair housing persist. There are still some real estate agents, landlords, and others who practice intentional discrimination against people of color, families with children, people with disabilities, and other Americans. But more often these days, local governments and real estate corporations engage in unjustified and unnecessary practices which have the practical effect of discriminating against people in search of housing.

In many communities, arbitrary regulations prevent the construction of affordable housing that would lead to more inclusive, integrated communities. Similarly, if a large apartment complex advertises vacancies only through word-of-mouth, the result is often that people of different races never have an opportunity to hear about or seek housing there. That means some groups of Americans are unfairly cut off from opportunities like quality schools, jobs, and business possibilities. That’s bad for us all. 

When a housing policy has the effect of perpetuating racial exclusion, and that policy is unnecessary or unjustified, it must be set aside or changed under the Fair Housing Act, whether or not the politicians who passed it were intentionally focused on racial discrimination. But now, that important principle is at risk.

On January 21, the U.S. Supreme Court will hear oral arguments in Texas Department of Housing and Community Affairs v. The Inclusive Communities Project. The case poses the question of whether the Fair Housing Act protects Americans from all housing policies that discriminate in practice, or only those motivated by an individual’s subjective, intentional bigotry.

The Supreme Court’s decision to take up this question is troubling. Typically, the court grants review of an issue only where the lower courts disagree, or where a lower court has invalidated an act of Congress. None of those circumstances exist here. Indeed, for over 40 years, every appellate court to consider the question has concluded that the act prohibits unfair and avoidable policies that discriminate in practice—known as disparate impact—as well as intentionally discriminatory decisions. The U.S. Department of Housing and Urban Development, which is charged with enforcing the act, has taken the same position, recently reaffirming this interpretation in new regulations.

This is the third time the justices have reached out to hear this issue—the previous two cases settled—leading many to conclude that a robust Fair Housing Act is in grave jeopardy. But it’s not that simple. It takes only four of the court’s nine justices to grant review, and there’s little question that the court’s four most conservative members (Chief Justice Roberts and Justices Scalia, Thomas, and Alito) would happily weaken the Act.  Another four members of the court (Justices Ginsberg, Breyer, Sotomayor, and Kagan) are likely to leave a strong and effective Fair Housing Act intact. So, as is often the case with civil rights questions, Justice Anthony Kennedy will likely cast the deciding vote, and may write the controlling opinion.

Justice Kennedy, and the court, should preserve the act’s full protections, prohibiting housing discrimination in all of its forms. Doing so would fulfill the intentions of Congress when it passed the act, uphold our national values, and advance our country’s interest in opportunity for all.

The Fair Housing Act was passed in 1968 in the wake of Dr. Martin Luther King Jr.'s assassination. There’s no question that congress sought to prohibit all forms of discrimination in housing.

As Senator Ted Kennedy explained when the act was being debated in congress, the inability of African Americans to move to higher opportunity neighborhoods stemmed in part “from a refusal by suburbs and other communities to accept low-income housing,” as well as from “the racially discriminatory practices not only of property owners themselves but also of real estate brokers,” and “the policies and practices of agencies of government at all levels.”  The act was intended to address all of those dynamics.

Just as important, a robust and effective Fair Housing Act is right for America in the 21st century. 

If the Supreme Court weakens the act, people seeking fair housing would have to somehow prove what was in a lawmaker or real estate company’s head in order to successfully challenge an exclusionary law. Experience shows that doing so is not only exceedingly difficult, but misses the harms the act was designed to address.

In 1968 and today, people of color are too often geographically isolated from opportunities like good schools, decent jobs, and quality health care. The Fair Housing Act was designed to topple the arbitrary obstacles that lead to that isolation, whether by design or in practice.

When those obstacles fall, our entire nation benefits through greater and more equal opportunity. Kids get a better education, parents are better able to support their families and contribute to our economy. Neighborhoods are healthier and more prosperous. And the more inclusive communities that result enable people of different groups to live, work, and play together in ways that strengthen our country.

Justice Kennedy has, in other cases, recognized the fundamental importance of that goal to America’s future. In a 2007 school integration case, he wrote that “this nation has a moral and ethical obligation to fulfill its historic commitment to creating an integrated society that ensures equal opportunity for all of its children.”

That goal can only be achieved through a fully effective Fair Housing Act. Let’s hope the court understands that. If not, we’ll be calling on a very different Congress to restore and fortify the act for the 21st century.

(Photo credit: Flickr user Chris Phan, CC BY 2.0)

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Alan Jenkins is the executive director and co-founder of The Opportunity Agenda.

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Chris Tomlin
8 Jan 15, 7:41 pm

Um… wrong.
Actually, there are quite a few very compelling arguments against the unfair, illogical and illegal “guilty-until-proven-innocent” notion of “disparate impact.”
The fiction-based unconstitutional legal overreach labeled “disparate impact” is a violation of the fundamental American principle of equality of opportunity in favor of the communist principle of equality of results.
As Justice Roberts has already said, “The way to stop discrimination on the basis of race is to stop discriminating on the basis of race.” 
That means neither deliberately excluding or including people by race NOR demanding some kind of artificial targeted racial ratio at the end of the day.  If there’s no deliberate discrimination, there’s no discrimination.  The simple reality that the facts on the ground fail to deliver the outcome you want does not establish the existence of any unfair treatment or discrimination.
The proper handling of ANY indication or accusation of discrimination is, and always has been, excruciatingly simple.
Prove it.
Oh no!  People accusing someone of a crime under the Fair Housing Act would have to prove it? 
Well yes, that’s how a fair justice system works.  Otherwise you need only point your finger and say “Witch!”
The purpose of the Civil Rights Act, the Voting Rights Act AND the Fair Housing Act is to prevent racial discrimination.
That’s all.
The achieving of some racial ratio pleasing to your politics in one aspect of society or another is the responsibility of some other province of public life.  It is something in which the government properly has no role at all.
You say “there’s no question that congress sought to prohibit all forms of discrimination in housing.”
Close.  But in American Insurance Association vs HUD, Judge Richard Leon clarified that the Act “unambiguously prohibits ONLY intentional discrimination.”
Refusing to rent or sell to people based on their race is one thing.  Trying to maintain a community’s character by limiting it to single family homes instead of apartments is something else altogether.  Unless people of certain races are deliberately prohibited from buying any of those single family homes, you do not have discrimination, no matter who freely decides to buy them and who decides not to. 
Likewise, using sound actuarial principles like credit rating, credit history, employment history and existing assets and liabilities to decide who gets a loan like, say, a mortgage, is not discrimination no matter what the colors of those granted or denied mortgages.  The only thorough research into mortgage lending that incorporated all possible variables, done by the University of Colorado and the state of Colorado in the 1990s, found the only racial discrimination in mortgage lending was actually IN FAVOR of minorities, giving those with bad credit histories more slack.
Actually with a government gun to their heads, banks did try to undo “disparate impact” in mortgage lending back in the ‘90s and early ‘00s.  The result was the 2008 meltdown.
“Disparate impact” is a ridiculous and unfair way to tar completely innocent people, indeed entire communities, with accusations of racism or discrimination when there is absolutely no evidence of it, none, zero.
“Disparate impact” is helpful only to trial lawyers who can bring frivolous lawsuits, and government bureaucrats who can violate communities’ sovereignty in violation of the 10th Amendment, based on nothing but statistics and demographics that prove no discrimination but just “look bad” depending on the biased, subjective interpretation of agenda-driven statisticians and demographers.
And we all know why those previous “disparate impact” cases, that DIDN’T go before the Supreme Court, were settled before the court could hear them.
The government’s lawyers knew they had no case for discrimination so they settled to keep the emptiness of their argument from being unveiled in court.  That would have put an end to their unconstitutional “disparate impact” intimidation game which cannot stand the scrutiny of the evidence it isn’t based on.

Miriam Axel-Lute
9 Jan 15, 2:03 pm

Chris, that would be a legitimate objection perhaps for anyone who doesn’t understand history, doesn’t believe in redress of wrongs that are still having ripple effects today, doesn’t care about leveling the playing field before declaring we’ve reached fairness, and denies the ample evidence of these indirect types of rules being used to intentionally discriminate in very destructive ways. There is already an exception in the law for if you have a legitimate business reason for something that has disparate impact. 1631/

Charlie Wilkins
13 Jan 15, 10:48 am

I’ve been reading the legal briefs from both sides of the upcoming Supreme Court case. There is quite a strong argument that the disparate-impact theory should be overturned, notwithstanding how useful disparate-impact has been, for example in challenging bad zoning laws and regulations.

Rather than painting the other side as evil and misguided, it would be better to take their arguments seriously and to start thinking of how to build a future in which there is no disparate-impact theory but in which advocates can still prevent the worst of the problems.

Brian Gilmore
13 Jan 15, 12:05 pm

I agree with the article but I disagree we have a robust Fair Housing Act. The Fair Housing Act is a failure, mainly on the issue of race. The country is seriously segregated. Sure, there are lawsuits and small organizations and law firms are winning cases and cash; however, the real purpose of the act remains in place. Racial segregation is still rampant nearly 50 years after the passage of the Act.  One solution would be to amend the law to correct its weaknesses. However, that will not happen. Perhaps, the solution is something else, something non-legal.  The excluded communities, mainly African-Americans, need to be able to build healthy, safe communities regardless of how integrated these areas happen to be. That should come first. I am all in favor of racial integration but it has reached the point now where upper middle class whites and middle class whites have sent their message loud and clear: they do not want to live around black people. My response to that is, blacks should stop trying. They should strengthen their own communities and not worry about integration right now. The FHA is a noble law but it is not working.  While we have tried to pick at the edges of racial segregation in housing, we have missed an opportunity to build communities which are strong and where diversity might occur from strength and not from weakness.

Thurmon A. Cohen
13 Jan 15, 12:09 pm

“Actually with a government gun to their heads, banks did try to undo “disparate impact” in mortgage lending back in the ‘90s and early ‘00s.  The result was the 2008 meltdown.” Once again I hear this falacious position being presented as fact. The facts are that there were more jumbo loans that defaulted than CRA loans. Secondly, it was wall streets greed in searching for yield that led to the 2008 meltdown. Lehman Brothers were begging mortgage brokers to provide more paper for their well healed clients.

13 Jan 15, 1:17 pm

The conservative Supreme Court has established a presumption against remedies that protect rights of ordinary citizens, an emphasis on intent (a word not actually found in the Fair Housing Act itself) , which generally must be articulated by the wrongdoer to be proven and thus liability is easily avoided, and a “you must jump through hoops and we will decide whether you have jumped high enough” attitude toward remedial legislation. Behind this is a politics that, rather than undo the wrongs of history, level the playing field and live up to the promise of America’s ideals, preserves the comfort levels of enough whites and the advantages and privileges that have continued after first the enslavement and later the Jim Crow second class citizenship of African Americans. This has won enough white loyalty to a conservative coalition that has been able to install both a majority of the Court and a Congress that is not about to make any positive changes itself. Ultimately a problem is that the wording of present civil rights laws, as interpreted by conservative court philosophy, was sufficient to deal with the legal segregation of the Jim Crow era but not the kind of structural racial inequality that we have today. We will see whether a new generation of racial justice activists can move beyond police violence issues and mobilize society in a way to produce legislation that works and courts that will carry it out.

Chris Tomlin
13 Jan 15, 4:01 pm

Oh, the horror of actually having to prove you’ve been wronged when you claim you’ve been wronged. 
All the nonsense about mortgage backed securities, credit default swaps and jumbo loans defaulting is a meaningless smoke screen.
Congress, and the Clinton and Bush administrations sent a forceful message to mortgage lenders:  If the application of cautious standards to mortgage lending results in an insufficient number (by the government’s judgement) of minorities being given mortgages, then those standards must be disregarded.  “Disparate impact,” you know.
Prior to that period, the banks had moved to numerical scoring techniques that were completely race-blind, as fair and equal as it’s possible to be.  The tables and the analysts had no idea the color of the people they were scoring.  Lo, those standards actually increased the racial disparity of mortgages granted and denied.  Those banks that increased their outreach in minority communities saw an increase in ineligible applications and their minority rejection rates went up.  So THEY got in trouble too.  Talk about no good deed going unpunished. 
So the floodgates were opened. 
Is it your contention that ONLY minority applicants should have been granted mortgages under the dangerously relaxed standards?
Or ONLY lower income borrowers?
Meanwhile, the larger banks and investment houses did what any market would do.    They devised financial products and investment vehicles to invest in the new tide of borrowing.  Yes, they acted as if the mortgages under the new “everybody MUST get a mortgage” standards were no more risky and in danger of default than they had been under the previous, more cautious, standards but, hey, the new standards had the approval and muscle of the government behind them.
Thus did the lunacy and unfairness of “disparate impact” crash the U.S. economy.
The Supreme Court cannot throw out that communist notion fast enough.

Miriam Axel-Lute
13 Jan 15, 4:27 pm

Interestingly, Chris, careful longitudinal studies have shown that when sound mortgages with non predatory terms were extended to people who could otherwise pay but whose credit scores had excluded them, they succeeded just fine. See: What failed was not the CRA loans (in fact there were fewer foreclosures in places with more CRA activity!), but the predatory loans, which were made with no intent of getting repaid. They were not made because someone was trying to rectify housing imbalances—they were made by people trying, and succeeding, in making a killing off those very people who had limited access to prime credit. If better mortgages had been more widely and fairly available, there would have been much less of a foothold for those unscrupulous lenders to cause so much trouble.

13 Jan 15, 6:42 pm

No the CRA did not make the financial industry come up with predatory loans, securitization and credit default swaps and defraud borrowers and investors alike. They “did what any market would do” which was to come up with complex, dangerous insider information driven products, pay off the appraisers, rating agencies, regulators and legislators who are supposed to guarantee integrity of the market, and developed a massive Ponzi scheme that paid them off the top fees but wrecked the economy, the neighborhoods and the investments and lives of millions of ordinary people. And now its supposed to be the fault of “disparate impact.” The lending industry could have provided decent loans at decent cost to these subprime borrowers, and as Miriam notes, gotten paid back, but they were unwilling to serve them except by creating a segregated high cost/high profit credit market (often using other names then they used for their prime borrowers) even for people to whom they could have given prime loans. Then when it blew up and the taxpayers had to bail them out, they blame it all on all those subprime minority borrowers. It’s not the good deeds that go unpunished, it’s the bad ones.

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