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Payday Lending Regulations Neglect To Address Concerns of Discrimination

Payday Lending Regulations Neglect To Address Concerns of Discrimination

The disparate impact test is an unworkable test, but not so much for its risk of inviting massive abuses, but rather for the heavy burden the test places https://loanmaxtitleloans.info/payday-loans-ak/ on claimants in Segregation in Texas, Professor Richard Epstein argues that the disparate impact standard is an “intrusive and unworkable test that combines high administrative cost with risk of inviting massive abuses by both the courts and the executive branch of government…” Indeed, in the context of payday lending.

The Department of Housing and Urban Development’s formula associated with the disparate effect test is just a three-part inquiry: at phase one the claimant must show that a specific training includes a “discriminatory impact.” At stage two, the financial institution may justify its methods since they advance some “substantial, genuine, nondiscriminatory interest.” At phase three, the claimant may bypass that reason by showing the genuine ends of “the challenged practice could possibly be served by another training who has a less discriminatory effect.”