MReport July 2018

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TH E M R EP O RT | 57 O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T THE LATEST GOVERNMENT HUD Wants You The department recently called for public comment on disparate impact. H UD has announced it will be seeking public comment on whether its 2013 Disparate Impact Regulation is consistent with a more recent 2015 Supreme Court ruling that clarifies liability as it pertains to disparate impact claims. "HUD remains committed to making sure housing-related policies and practices treat people fairly," HUD Secretary Dr. Benjamin Carson said. "We will always challenge any practice that discriminates against people the law protects." The Supreme Court's 2015 ruling in Texas Department of Housing and Community Affairs v. Inclusive Communities Project, Inc. determined that disparate impact claims—claims made on actions that have a discriminatory consequence, even if there is no discriminatory intent—can provide a framework for liability under the Fair Housing Act. As noted in HUD's announcement of the call for public comment, "While the Supreme Court referred to HUD's Disparate Impact Regulation in its Inclusive Communities ruling, it did not directly rule upon it." Following the 2015 Supreme Court ruling, the Obama administration implemented the Affirmatively Furthering Fair Housing (AFFH) Rule, which directed any community receiving block grant funding from HUD to complete a comprehensive Assessment of Fair Housing. Under the AFFH rule, communities must review their housing policies and submit an Assessment of Fair Housing (AFH) plan to HUD outlining their plans to combat discriminatory policies. Failure to do so could cost those communities their block grants and other federal housing aid. On January 5, 2018, HUD announced it would be extending the deadline for AFH submissions until 2020. The HUD notice reads, in part, "Based on the initial AFH reviews, HUD believes that program participants need additional time and technical assistance to adjust to the new AFFH process and complete AFH submissions that can be accepted by HUD." Carson has publically voiced his criticism of both the Supreme Court ruling and the AFFH Rule. In a 2015 op-ed for The Washington Times, Carson said, "These government-engineered attempts to legislate racial equality create consequences that often make matters worse. There are reasonable ways to use housing policy to enhance the opportunities available to lower-income citizens, but based on the history of failed socialist experiments in this country, entrusting the government to get it right can prove downright dangerous." The New York Times reported that a coalition of civil rights advocacy groups planned to sue the Trump administration over HUD's delays in AFFH implementation. As reported by the Times, "The suit claims that Mr. Carson is leaving HUD without a system to prevent a pattern of discrimination in the allocation of $28 billion in disaster relief funding after a succession of natural disasters, including Hurricane Harvey, last year." On May 14, New York Gov. Andrew Cuomo, himself a former HUD secretary, announced that the state of New York would be joining the lawsuit, as reported by The Washington Post. We have reached out to HUD for comment. Mulvaney Puts Focus on Cost-Benefit Analysis A recent memo outlines the BCFP's acting director's desire to reexamine the Bureau's priorities and purpose. B ureau of Consumer Financial Protection (BCFP) Acting Director Mick Mulvaney's tenure at the head of the regulatory organization has been defined by a reexamination of the Bureau's priorities and purpose. That trend continued this week with the issuance of a new memo written by Mulvaney and distributed to BCFP staff. The memo, as reported by The Wall Street Journal, highlights an increased focus on considering the cost-benefit analysis of both regulations and regulatory enforcement imposed by the BCFP. According to the WSJ, the memo outlines Mulvaney's plan to create an "office of cost-benefit analysis" that will be tasked with evaluating the Bureau's oversight and enforcement from a financial standpoint. That move will likely find support among critics of the Bureau who believe its regulatory actions can be overly burdensome on the industries the Bureau oversees. It is also consistent with the arc of Mulvaney's tenure at the BCFP—a long-time critic of the Bureau before his appointment as Acting Director, Mulvaney in February issued a memo vowing to hew to the Bureau's statutory responsibilities but go "no further." In that memo, Mulvaney explained that "pushing the envelope in pursuit of other objectives ignores the will of the American people" and "also risks trampling upon the liberties of our citizens." The BCFP strategic plan for 2018–2022 laid, issued in February, laid out three goals: • Ensure that all consumers have access to markets for consumer financial products and services. • Implement and enforce the law consistently to ensure that markets for consumer financial products and services are fair, transparent, and competitive. • Foster operational excellence through efficient and effective processes, governance, and security of resources and information. The WSJ also reports that the new memo formally installs Brian Johnson and Kirsten Sutton as aides who will serve as Mulvaney's "representatives in each division." The WSJ reports that, per Mulvaney's memo, Johnson will serve as the "final stop on all things policy-related" for Mulvaney and Sutton will serve as Mulvaney's "lead on management issues." Leadership of the BCFP was thrown into question last fall, following the surprise resignation of Director Richard Cordray. On his way out, Cordray named his Chief of Staff, Leandra English, as Deputy Director of the BCFP. However, President Trump then appointed White House Budget Director Mick Mulvaney to head the BCFP. This kicked off a series of legal challenges between the two over who was the rightful leader of the organization, with Mulvaney eventually prevailing. Ex-BCFP Director Richard Cordray officially clinched the Democratic nomination for the governorship of Ohio. Campaigning on both his history at the BCFP and a promise to focus on economic matters affecting Ohioans, Cordray defeated five other contenders during the Ohio Democratic primary, including former Congressman and Cleveland Mayor Dennis Kucinich.

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