[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
A GENERAL OVERVIEW OF
DISPARATE IMPACT THEORY
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON OVERSIGHT
AND INVESTIGATIONS
OF THE
COMMITTEE ON FINANCIAL SERVICES
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
FIRST SESSION
__________
NOVEMBER 19, 2013
__________
Printed for the use of the Committee on Financial Services
Serial No. 113-51
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HOUSE COMMITTEE ON FINANCIAL SERVICES
JEB HENSARLING, Texas, Chairman
GARY G. MILLER, California, Vice MAXINE WATERS, California, Ranking
Chairman Member
SPENCER BACHUS, Alabama, Chairman CAROLYN B. MALONEY, New York
Emeritus NYDIA M. VELAZQUEZ, New York
PETER T. KING, New York MELVIN L. WATT, North Carolina
EDWARD R. ROYCE, California BRAD SHERMAN, California
FRANK D. LUCAS, Oklahoma GREGORY W. MEEKS, New York
SHELLEY MOORE CAPITO, West Virginia MICHAEL E. CAPUANO, Massachusetts
SCOTT GARRETT, New Jersey RUBEN HINOJOSA, Texas
RANDY NEUGEBAUER, Texas WM. LACY CLAY, Missouri
PATRICK T. McHENRY, North Carolina CAROLYN McCARTHY, New York
JOHN CAMPBELL, California STEPHEN F. LYNCH, Massachusetts
MICHELE BACHMANN, Minnesota DAVID SCOTT, Georgia
KEVIN McCARTHY, California AL GREEN, Texas
STEVAN PEARCE, New Mexico EMANUEL CLEAVER, Missouri
BILL POSEY, Florida GWEN MOORE, Wisconsin
MICHAEL G. FITZPATRICK, KEITH ELLISON, Minnesota
Pennsylvania ED PERLMUTTER, Colorado
LYNN A. WESTMORELAND, Georgia JAMES A. HIMES, Connecticut
BLAINE LUETKEMEYER, Missouri GARY C. PETERS, Michigan
BILL HUIZENGA, Michigan JOHN C. CARNEY, Jr., Delaware
SEAN P. DUFFY, Wisconsin TERRI A. SEWELL, Alabama
ROBERT HURT, Virginia BILL FOSTER, Illinois
MICHAEL G. GRIMM, New York DANIEL T. KILDEE, Michigan
STEVE STIVERS, Ohio PATRICK MURPHY, Florida
STEPHEN LEE FINCHER, Tennessee JOHN K. DELANEY, Maryland
MARLIN A. STUTZMAN, Indiana KYRSTEN SINEMA, Arizona
MICK MULVANEY, South Carolina JOYCE BEATTY, Ohio
RANDY HULTGREN, Illinois DENNY HECK, Washington
DENNIS A. ROSS, Florida
ROBERT PITTENGER, North Carolina
ANN WAGNER, Missouri
ANDY BARR, Kentucky
TOM COTTON, Arkansas
KEITH J. ROTHFUS, Pennsylvania
Shannon McGahn, Staff Director
James H. Clinger, Chief Counsel
Subcommittee on Oversight and Investigations
PATRICK T. McHENRY, North Carolina, Chairman
MICHAEL G. FITZPATRICK, AL GREEN, Texas, Ranking Member
Pennsylvania, Vice Chairman EMANUEL CLEAVER, Missouri
PETER T. KING, New York KEITH ELLISON, Minnesota
MICHELE BACHMANN, Minnesota ED PERLMUTTER, Colorado
SEAN P. DUFFY, Wisconsin CAROLYN B. MALONEY, New York
MICHAEL G. GRIMM, New York JOHN K. DELANEY, Maryland
STEPHEN LEE FINCHER, Tennessee KYRSTEN SINEMA, Arizona
RANDY HULTGREN, Illinois JOYCE BEATTY, Ohio
DENNIS A. ROSS, Florida DENNY HECK, Washington
ANN WAGNER, Missouri
ANDY BARR, Kentucky
C O N T E N T S
----------
Page
Hearing held on:
November 19, 2013............................................ 1
Appendix:
November 19, 2013............................................ 33
WITNESSES
Tuesday, November 19, 2013
Kirsanow, Peter N., Commissioner, U.S. Commission on Civil
Rights, and Partner, Benesch, Friedlander, Coplan & Arnoff..... 5
Marcus, Kenneth L., President and General Counsel, Louis D.
Brandeis Center for Human Rights Under Law..................... 7
Parker, Dennis D., Director, Racial Justice Program, American
Civil Liberties Union.......................................... 8
APPENDIX
Prepared statements:
Kirsanow, Peter N............................................ 34
Marcus, Kenneth L............................................ 39
Parker, Dennis D............................................. 46
Additional Material Submitted for the Record
McHenry, Hon. Patrick:
Written statement of the National Association of Mutual
Insurance Companies (NAMIC)................................ 110
Ellison, Hon. Keith:
Written responses to questions submitted to Dennis Parker.... 134
A GENERAL OVERVIEW OF
DISPARATE IMPACT THEORY
----------
Tuesday, November 19, 2013
U.S. House of Representatives,
Subcommittee on Oversight
and Investigations,
Committee on Financial Services,
Washington, D.C.
The subcommittee met, pursuant to notice, at 10:06 a.m., in
room 2128, Rayburn House Office Building, Hon. Patrick McHenry
[chairman of the subcommittee] presiding.
Members present: Representatives McHenry, Duffy, Fincher,
Hultgren, Barr, Rothfus; Green, Cleaver, Ellison, Maloney,
Delaney, Beatty, and Heck.
Ex officio present: Representatives Hensarling and Waters.
Also present: Representative Garrett.
Chairman McHenry. The Subcommittee on Oversight and
Investigations will come to order. Without objection, the Chair
is authorized to declare a recess of the subcommittee at any
time.
Today's hearing is entitled, ``A General Overview of
Disparate Impact Theory.''
I will now recognize myself for 5 minutes for an opening
statement.
Fairness, fundamental fairness, ensures that those who must
enforce the law, know the law. Fairness, fundamental fairness,
also says that those who are under the law will understand the
law. Those who benefit from the law should have a level of
understanding of what the rules of the game are as well.
Discrimination based on race, sex, or other prohibitive
factors is destructive and morally repugnant. More specific to
the jurisdiction of this committee, discrimination in housing
and in lending is unfair and unjust and has no place in the
American marketplace. Unfortunately, discrimination still
exists.
For this reason, the protections afforded by the Federal
Civil Rights Statutes remain important and necessary. These
statutes, like the Fair Housing Act and the Equal Credit
Opportunity Act, obligate the government to investigate
allegations of discrimination, and to take appropriate action
to end discriminatory practices and provide relief to victims.
According to the legal theory of disparate impact, the
government or private litigants can bring discrimination claims
based solely on statistics that suggest an otherwise neutral
policy disparately impacts protected classes. While I believe
data can be helpful in better understanding the roots of
disparity, it is disconcerting that unlike other illegal
discrimination claims, disparate impact claims do not require
the government or a private plaintiff to provide intent to
discriminate.
It is important to remember that resources to fight
discrimination are not unlimited. I believe our witnesses today
make a strong argument that precious resources to fight
discrimination are needlessly diluted when agencies with civil
rights missions attack disparities that arise for reasons other
than discrimination.
This is a timely hearing, as the Department of Housing and
Urban Development (HUD) and the Consumer Financial Protection
Bureau (CFPB) are considering disparate impact in their
regulatory writing and the issuing of guidance. And up until a
few days ago, the Supreme Court was planning to address the
legitimacy of disparate impact claims under the Fair Housing
Act this term.
That, as has been covered in the press, is no longer the
case.
In front of us today, we have an expert panel of witnesses
who have spent their careers fighting illegal discrimination.
In the course of this hearing, I hope to gain a better
understanding of the challenges facing those seeking fair
treatment under the law and the best way to protect minorities
and the most vulnerable in our society from illegal
discrimination.
And with that, I yield 5 minutes for an opening statement
to the ranking member of the subcommittee, Mr. Green of Texas.
Mr. Green. Thank you, Mr. Chairman.
And I would like to thank you for acknowledging that we
still have invidious discrimination, that the battle to end
invidious discrimination is not yet over.
I am also appreciative that you have embraced this hearing
with an open mind so that we can come to conclusions about a
long settled standard of disparate impact.
It is my belief that this hearing will be about whether
discrimination has to have intention to be harmful. It will be
about whether good people can make bad policy. It will be about
whether or not a financial institution can charge African
Americans $2,937 more than similarly situated White customers
for their loans, and charge Hispanics $2,187 more for their
loans.
I mention these specific examples because these are
examples of how the disparate impact standard, well-settled
standard, has had a positive impact on our society and
especially on people in certain classes.
I would like to hearken back, if I may, to 1968, because it
was the death of Dr. King that allowed or caused, if you will,
this Congress, meaning the Congress of the United States of
America, to pass the Civil Rights Act of 1968, which has Title
VIII within it, the Fair Housing Act.
And it was not an easy time for us in this country. There
was invidious discrimination. But there was also covert
discrimination. And the Civil Rights Act of 1968 allows us to
fight both overt and covert discrimination.
It is great to be able to prove intentionality, that there
was intent to do harm. But there are many cases wherein the
intent is well-concealed, and the law allows us to use the
disparate impact standard to get to that intent that is well-
concealed.
We would not be here today, in my opinion, debating an
issue of whether or not you have to have intent to do harm to
me, if you should hit me with your car. And I am someplace that
I lawfully should be. I am not in any way negligent.
You don't have to have intent to harm me. And you don't
have to have intent to be liable for the harm that you cause.
Intentionality is obviously an element that, if proven, is
beneficial. But there are other ways, there are other
circumstances that allow us to prove harm.
And this harm has been shown to be proven with the
disparate impact theory.
My hope, Mr. Chairman, is that after today's hearing, we
will not find law being promulgated, legislation being
promulgated to eliminate or limit what we have had for more
than 40 years now as good standing law. My hope is that as we
move forward, we may do some things to improve upon what was
done in 1968, but not limit it and not circumvent what we have
found to be a means by which we can continue to combat
invidious discrimination.
Finally, Mr. Chairman, let me say this: This has been a
continuing fight to eradicate discrimination. The law in 1968
was not passed unanimously. And since its passage, we have had
many efforts to try to limit it, or eliminate it. We have had
litigation. And some of the litigation has been settled.
I think that this litigation has been settled had many
aspects to it that we may discuss today. But I do believe that
the courts, all of the courts that have taken up these issues
which have walked away with the notion that it is a legitimate
standard which can be used to help eliminate invidious
discrimination.
We have come a long way, but we are not there yet. And my
hope is that we won't today or at some point in the near future
decide that we are going to turn back the clock to a pre-1968
era.
I yield back the balance of my time.
Chairman McHenry. And under prior agreement with the
ranking member, Mrs. Beatty is recognized for 2 minutes.
Mrs. Beatty. Thank you, Mr. Chairman, and Mr. Ranking
Member, for holding this hearing today. I think it is very
timely.
Let me also thank you for being here as witnesses for
something which is very difficult and painful for me, as I
reflect back to growing up in 1968, and to being discriminated
against in the housing market because of the color of my skin.
Mr. Chairman, it was very welcoming to hear your opening
remarks and also the remarks of Ranking Member Green.
I will use your words, Mr. Chairman, throughout my
conversation and dialogue with the witnesses today, that
discrimination has no place in the American marketplace.
And so, as we later question and have dialogue with the
witnesses, you will hear those comments from me.
Let me just say that today's hearing comes at a very
interesting time, coming 1 week after the notice of the
settlement in the Mount Holly case. Certainly, we all are
familiar with that case, and this settlement seems to finally
conclude the decade-long dispute regarding the use of disparate
impact theory in the context of housing policy.
Certainly, you know that this case was scheduled for
argument before the Supreme Court, and was expected to be a
landmark case, which would have given the highest court in the
land the opportunity to evaluate the applicability and future
of the legal theory of disparate impact in the housing market.
And certainly, we know it was never argued before the
Supreme Court, and the disparate impact clause of the Fair
Housing Act has consistently been held up 11 different times in
the court of appeals over the last 4 years.
I think I will leave you with this thought: Has
discrimination been so institutionalized that we don't know the
difference between intentional and unintentional
discrimination?
Thank you, Mr. Chairman.
Chairman McHenry. Thank you, Mrs. Beatty.
We will now recognize our distinguished panel of witnesses.
First, Peter N. Kirsanow, is a Commissioner on the United
States Commission on Civil Rights, where he is currently
serving his second 6-year term. From 2006 to 2008, Commissioner
Kirsanow also served as a member of the National Labor
Relations Board.
He was appointed to both positions by President George W.
Bush, and is a partner with the law firm of Benesch,
Friedlander, Coplan & Arnoff, as part of its Labor Employment
Practices Group, and is also a member of the firm's Diversity
and Inclusion Committee.
Commissioner Kirsanow received his B.A. in 1976 from
Cornell University, and his J.D. with honors in 1979 from
Cleveland State University, where he served as articles editor
of the Cleveland State Law Review.
Second, Kenneth L. Marcus is the President and General
Counsel of the Louis D. Brandeis Center for Human Rights Under
Law. Mr. Marcus founded the Brandeis Center in 2011 to combat
the resurgence of anti-Semitism in American higher education.
He is the author of the award-winning book, ``Jewish
Identity and Civil Rights in America,'' and previously held the
Lillie and Nathan Ackerman Chair in Equality and Justice in
America at the Baruch School of Public Affairs at the City
University of New York.
Mr. Marcus served in the George W. Bush Administration as
the Staff Director of the United States Commission on Civil
Rights, and as the General Deputy Assistant Secretary of
Housing and Urban Development for Fair Housing and Equal
Opportunity.
Mr. Marcus is a magna cum laude graduate of Williams
College, and is also a graduate of the Boalt Hall School of Law
at Berkeley.
And finally, Dennis Parker is the Director of Civil Justice
Programs with the American Civil Liberties Union. In that
position, Mr. Parker focuses on combating discrimination and
addressing other related issues.
Prior to joining the ACLU, Mr. Parker was the Chief of the
Civil Rights Bureau in the Office of the New York State
Attorney General under Eliot Spitzer.
Mr. Parker previously served for 14 years at the NAACP
Legal Defense and Education Fund, and teaches race, poverty and
constitutional law at the Columbia University School of Law
Institute.
And Mr. Parker is a graduate of Harvard Law School and
Middlebury College.
The witnesses will now be recognized for 5 minutes for an
oral presentation of their testimony.
And, without objection, the witnesses' written statements
will be made a part of the record, and the witnesses will have
until close of business Friday to revise and extend their
witness testimony.
On your tables, there are lights--red, yellow, and green--
and I don't have to explain the meaning of those. Even Members
of Congress mostly understand that. The microphone is also very
sensitive, so make sure it is directed towards your mouth. And
dealing with the technology as we are, I have to say those
things.
So, with that, we will now recognize Commissioner Kirsanow
for 5 minutes.
STATEMENT OF PETER N. KIRSANOW, COMMISSIONER, U.S. COMMISSION
ON CIVIL RIGHTS, AND PARTNER, BENESCH, FRIEDLANDER, COPLAN &
ARNOFF
Mr. Kirsanow. Thank you, Chairman McHenry, Ranking Member
Green, and members of the subcommittee.
I am a member of the U.S. Commission on Civil Rights. And
as you know, the Civil Rights Commission was created by the
1957 Civil Rights Act to, among other things, investigate
denials of equal protection and discrimination on the basis of
race and other protected classifications.
In furtherance of the Commission's objective to investigate
denials of equal protection and discrimination on the basis of
race and other protected classifications, we have held a number
of hearings over the years related to disparate impact, either
directly or indirectly. And the last such hearing occurred in
December of 2012.
There are four broad concepts or conclusions that can be
drawn from those hearings. First, the doctrine of disparate
impact is at least of dubious legality and provenance under the
Equal Protection Clause.
Second, in many respects, the implementation of disparate
impact has been profoundly misguided and elevates equal
outcomes over equal opportunity.
Third, although in some respects it has definitely been
well-intended, as we have seen in a number of Civil Rights
Commission hearings, it has a tendency to harm its purported
intended beneficiary.
And finally, it is antithetical to the proposition that
individuals are supposed to be judged by the content of their
character, versus the color of their skin, because the
qualifications standards test devices, policies, dealing with
or that purportedly result in disparate impact reveal
character--and that may reveal character--often are
subordinated to raw color calculations.
Expanding for a moment on the dubious legality of disparate
impact, disparate impact emerged from the 1964 Civil Rights
Act. If you take a look at the Floor debate among Floor
managers of the 1964 Civil Rights Act, disparate impact was not
contemplated as a doctrine to prove discrimination or any form
of discrimination, as the 1964 Civil Rights Act, but the
theoretical framework for disparate impact was already being
developed by attorneys for the EEOC. And when the Fair Housing
Act was adopted in 1968, disparate impact had not yet been
adopted as a doctrine for demonstrating some type of
discrimination under the 1964 Civil Rights Act.
It wasn't until 1971, when the Supreme Court did adopt
disparate impact under Griggs v. Duke Power, that it did become
a doctrine with respect to employment law, with respect to
Title VII. What is interesting about Griggs v. Duke Power is,
you may recall, there was the requirement that was applied only
after job positions were opened up to everybody, that everyone
have a high school diploma, among other things, and that had
disparate impact among Black employees.
The Supreme Court indicated that it had to have some type
of job relatedness or business necessity to be justified. What
is often forgotten is that standard device test qualification
was adopted with a discriminatory intent.
After the 1971 decision in Griggs v. Duke Power, disparate
impact metasticized into a number of other areas that there
hadn't been up to that point any prediction that it would be
expanded to other areas. Disparate impact necessarily
classifies on the basis of race, and to that extent, unless it
meets the strict scrutiny standard which is the highest
standard of our Nation's juris prudence, it violates the equal
protection clause unless it serves the compelling governmental
interest or is nearly tailored to serve that interest.
And that is of dubious probability given the Seattle case,
the Louisville case, and even Grutter v. Bollinger.
In terms of its misguidedness, any classification, any type
of standard, any type of test will necessarily have a disparate
impact, because we judge people on the basis of individuality
and not race.
Famously, one of my colleagues, during a debate, said that
she would write a check for $10,000 to anyone who could
identify any standard, any device, any policy, any practice
that did not yield a disparate impact. I would never make such
an offer, maybe $10, but I nonetheless go along with the
proposition that it would be extremely difficult to find
anything that didn't yield a disparate impact. With respect to
housing criteria, and loan criteria for example, almost any
qualification would yield a disparate impact on the basis of
race, sex, national origin--maybe color--almost any protected
class. Employment rates, income, assets, criminal history,
family structure--each one of those has different yields
depending upon which class someone belongs to.
Finally, with respect to whether or not it has universally
broadly--universal good effects, it has a tendency to harm its
beneficiaries--I see my time is up. I would be glad to expand
on these remarks in the question-and-answer period.
Thank you, Mr. Chairman.
[The prepared statement of Mr. Kirsanow can be found on
page 34 of the appendix.]
Chairman McHenry. Mr. Marcus?
STATEMENT OF KENNETH L. MARCUS, PRESIDENT AND GENERAL COUNSEL,
LOUIS D. BRANDEIS CENTER FOR HUMAN RIGHTS UNDER LAW
Mr. Marcus. Thank you, Chairman McHenry, Ranking Member
Green, and distinguished members of the subcommittee. I am
honored to appear again before this committee. At the same time
I confess to being somewhat mortified to have to be discussing
this particular topic.
I don't think any of us is pleased by the obligation to be
fighting discrimination in this day and age. And yet, we are
continually reminded that discrimination persists despite the
progress that we have made over the decades.
When I was in the civil rights enforcement area within
government, and even today in the public interest advocacy
realm, I have found numerous instances of intentional
discrimination and bigotry including in the housing realm in
which, even nowadays, African Americans, Hispanics, and others
are often faced with a situation in which renters do not want
them, lenders do not want them, and so on and so forth, and I
believe this to be one of the greatest evils that we face to
this day.
In my written testimony, I give a couple of examples from
very recently in which HUD found blatant intentional
discrimination, in one case against Burmese immigrants where
renters simply did not want them on their premises. And in
another instance, in which renters not only did not want
African Americans in their mobile home community, but also
didn't want anyone who would date an African American.
We have these blatant cases, and it is my feeling that the
scarce resources of the Federal civil rights agencies are
seldom sufficient to deal with them.
And one of the challenges that we have is that our
governmental agencies are often dividing their resources
between cases involving blatant intentional discrimination and
other things.
Now, it is my view that disparities are important to
observe. As a civil rights enforcement official, I was
certainly on the lookout for racial and ethnic disparities.
For instance, at the Department of Education, I was
continually sifting through data to see whether there were
disparate rates of minorities being either subjected to
discipline or to misidentification for special education.
The reason I did that is because I have always considered
disparities to be a kind of smoke. And where there is smoke,
there is sometimes fire. And when there is smoke, a good fire
department sends a truck to see what is going on. But, I also
believe that it is possible to confuse the smoke and the fire.
And I think too much of the time we say that the disparate
impact is the problem when in fact it is in fact sometimes a
symptom of the problem or a sign of the problem.
Now, when we do that, when we say, we are not going to look
for intentional discrimination, we are simply going to look for
disparities, there are several different kinds of problems that
arise.
One is the diversion of resources that I mentioned. And I
think that if you go through the most recent charges by the
Office of Fair Housing and Equal Opportunity, you will find
that there are some charges that appear to be based on actual
discrimination. And, there are other charges where you would
probably agree that they are not of the sort of severity that
you would want them clogging up the system.
So I think it is a real problem when our scarce resources
are diverted into things other than discrimination. There is
also a problem of equal protection. And Commissioner Kirsanow
averred to that somewhat.
One of the challenges with disparate impact is that
virtually--I would say that when income and wealth are unevenly
distributed in society, virtually any standard for underwriting
or for determining who to rent to will have a disparate impact.
And so that pushes people into an untenable situation:
either be subject to potential liability for violation of Title
VIII or other discrimination laws, even if there is no intent
to discriminate or no unconscious discrimination; or try to
eliminate that disparity in a way that may require race-
conscious action that will violate the equal protection clause.
So in many cases, attempts to comply with disparate impact
will run the risk of violating the equal protection clause,
which is why Justice Scalia indicated in the Ricci v. DeStefano
case that the day will come in which the conflict becomes
unavoidable between those provisions.
And finally, in many cases, there is a pressure to impose
some sort of quota or other artificial means of eliminating a
disparity rather than simply saying, we will use purely race-
neutral means.
So what I would say is that while we need to push as hard
as we can to eliminate intentional and even unconscious
discrimination, disparate impact, as it has been applied, is
often counterproductive towards those efforts.
[The prepared statement of Mr. Marcus can be found on page
39 of the appendix.]
Chairman McHenry. Mr. Parker?
STATEMENT OF DENNIS D. PARKER, DIRECTOR, RACIAL JUSTICE
PROGRAM, AMERICAN CIVIL LIBERTIES UNION
Mr. Parker. Good morning, Chairman McHenry, Ranking Member
Green, and members of the subcommittee.
My name is Dennis Parker, and I am the director of the
Racial Justice Program of the American Civil Liberties Union.
Our charge is to eliminate barriers to full participation in
civic society. And in the name of full disclosure, I am one of
the attorneys on the Atkins v. Morgan Stanley case, a case that
relies on disparate impact to prove the devastating impact of
unfair lending practices on people of color in Detroit.
The Fair Housing Act was passed nearly 50 years ago to
address problems of residential segregation and conditions of
poverty which had blocked access to opportunity to communities
of color and led to civil unrest.
From the outset, the bipartisan sponsors and supporters of
the Fair Housing Act recognized that it was necessary to
prohibit all forms of discrimination--both acts resulting from
discriminatory intent as well as acts neutral on their face,
which had an unjustified discriminatory effect.
In order to achieve the broad antidiscrimination goals of
the Act, Congress, the government agencies charged with
enforcing the Act, and each of the courts which had interpreted
the Act have recognized that the disparate impact standard is a
necessary tool in fighting discrimination in all of its forms,
and that without the standard practices which have the same
discriminatory consequences as intentional discrimination would
be shielded from the reach of the law.
Both at the time that the statute was passed, and on
subsequent occasions, Congress has resisted attempts to limit
the application of the law to instances of intentional
discrimination.
Between the enactment of the Fair Housing Act in 1968 and
the time when Congress made significant changes to the Act in
1988, all nine courts of appeals which considered the issue
concluded that the Fair Housing Act permitted the use of
disparate impact claims to fight discrimination in all of its
forms.
In 1988, against the backdrop of the unanimous approval of
disparate impact claims by all courts of appeals, Congress
extended the coverage of the Act to prohibit discrimination
based on familial status and disability, added specific
exemptions to the Act which would only make sense in light of a
continuing disparate impact standard, and enhanced the
Department of Housing and Urban Development's authority to
interpret the Fair Housing Act.
In the years following the amendments, HUD, the Justice
Department, and the agencies charged with enforcing the fair
housing and fair lending laws have interpreted the fair housing
laws to permit disparate impact claims; have trained their
employees to use disparate impact analysis, and have brought
enforcement actions relying on disparate impact.
During that same period, the two circuit courts which had
not previously addressed the question of the validity of the
disparate impact statement, joined the other nine circuits in
approving it. On February 15th of this year, HUD reaffirmed the
decades-long recognition of the availability of the standard
after going through a period of formal notice and comment.
The need for the disparate impact standard as a tool in
fighting discrimination is as great or greater now than it has
ever been. Problems of residential segregation and the
accompanying limitation on access to fine schools,
transportation, healthy environments, and employment
opportunities continue to plague the Nation.
One striking example of the continuing need for an
effective way of addressing the increasingly subtle way in
which protected classes are denied fair housing can be seen in
the wake of the economic crisis of 2008. Discriminatory lending
practices, which included providing high-risk subprime loans to
members of communities of color, communities which had
previously experienced a long history of intentional
discrimination in the form of racial steering, redlining, and
lack of access to financial institutions. The combination of
the abusive lending practices and the history of discrimination
resulted in a foreclosure crisis which had a particularly
serious impact on communities of color. And I would point out
that the impact of these loans extended to people who had good
credit. An African American or a Latino person with a high
credit rating was more likely to get an abusive subprime loan
than a White similarly-situated person.
The impact was serious on the communities of color and it
reversed many of the gains that were made over the past 50
years.
I notice that my time is up and so I will just say that the
disparate impact standard permits the defendant in the case to
show that there was a justification for the policy and practice
that is being challenged. By permitting the balance between
impact goals and the means of achieving those goals, the
disparate impact standard permits challenges to barriers which
prohibit equal opportunity to fair housing.
It is common sense that any policy which unnecessarily
excludes people from housing because of their race, gender,
ethnicity or any other protected class should be set aside for
one which asserts everyone's needs fairly, effectively, and
without discrimination.
Disparate impact is a commonsense way, and we urge that its
continued use be permitted.
[The prepared statement of Mr. Parker can be found on page
46 of the appendix.]
Chairman McHenry. I will now recognize myself for 5 minutes
for questioning.
Commissioner Kirsanow, what is disparate impact?
Mr. Kirsanow. Disparate impact is the result of any type of
standard, test, qualification, policy, or practice which yields
a disproportionate outcome for members of a protected class. At
least, that is the colloquial definition of it.
Now, disparate impact obviously deals with outcome. It is
not necessarily anything to do with opportunity and input. In
addition to that, disparate impact has no bearing on whether or
not some type of device, policy, or practice is intentionally
adopted in order to discriminate on the basis of a protected
class.
Chairman McHenry. I am not a lawyer, so how does disparate
impact differ from disparate treatment discrimination?
Mr. Kirsanow. Right. Disparate treatment presumes some type
of intentional treatment, disparate treatment. That is, you
take a Black applicant and a White applicant and you
consciously and intentionally--because you can have unconscious
discrimination also--or unconsciously and intentionally
discriminate against someone on the basis of their protected
class, the Black applicant for example.
Disparate impact is where there was no intent necessarily
to discriminate, yet because of a qualification standard--let's
say, for example, in Griggs v. Duke Power, that you have a
requirement that everybody who obtains a particular employment
position have a high school diploma. At least in that area,
North Carolina--I'm sorry, South Carolina at the time--the
number of Black applicants for a position who had a high school
diploma would be far below that of Whites. The outcome
therefore would be that more Whites would get that position.
That would be disparate impact.
In Griggs v. Duke Power, that was done intentionally. In
many disparate impact cases, there has been no proof of
discrimination as the motivating factor for that particular
qualification or standard.
Chairman McHenry. So, Mr. Marcus, is disparate impact fair?
The use of disparate impact as a legal theory, is it fair?
Mr. Marcus. In my view, some uses are fair. Some may not
be. I would say there are two ways of looking at disparate
impact. For some, disparate impact is a way of smoking out
intentional discrimination that cannot be demonstrated through
other ways. So we say, there may not be evidence of intentional
discrimination, and yet we think it is there. So we create an
analytical device that will help us to find it.
The other approach is to say, no, disparate impact has
nothing to do with intent. It is all about the effect. It is a
way of eliminating certain effects on minorities that cannot be
justified by business necessity.
I believe that there may be ways of using disparate impact
to find intentional discrimination, and perhaps the courts will
even narrow disparate impact doctrine in order to do that. But
where disparate impact becomes detached from discrimination,
where it is no longer about intentional discrimination, it has
all kinds of unfair ramifications.
One is that it prevents agencies and lawyers from focusing
on real intentional or even unconscious discrimination. And
another is that it treats employers or lenders or others as if
they were bigots, as if they were discriminators when they have
no conscious or even unconscious intent to discriminate against
anybody.
So by lumping real bigots in with people who develop
policies that have no conscious or unconscious animus, I think
it can be unfair.
Chairman McHenry. So, Commissioner Kirsanow, was disparate
impact discrimination prohibited under the Civil Rights Act of
1964?
Mr. Kirsanow. The intent in 1964, if you look at what the
Floor managers were talking about, Congressman McCullough for
example and others, there was no intent to use disparate
impact, that is to have equality of outcomes. There was
considerable debate about that. Clearly, there was an element
within Congress that wanted to use that as a tool or device, as
Ken indicated, but the outcome of all that was that it would--
that is, the 1964 Civil Rights Act, would be calculated to
address, as Ranking Member Green talked about, invidious
discrimination; an intent to discriminate on the basis of, back
in 1964, race and all the other protected classes.
Chairman McHenry. My time is short. So was disparate impact
addressed in the original Fair Housing Act of 1968?
Mr. Kirsanow. Not specifically. There was considerable
debate about that, and disparate impact first came to fruition
in 1971 with Griggs v. Duke Power.
Chairman McHenry. Okay. We will now recognize Mr. Cleaver
for 5 minutes.
Mr. Cleaver. Thank you, Mr. Chairman.
And to the ranking member, thank you for the hearing.
Mr. Marcus, let us assume that in 1984, a certain
neighborhood had filed a covenant with the mortgages of the
land involved in a subdivision. And the covenant prohibited
selling your home to an African American. And then they put a
list together of individuals who wanted to buy in that area,
but since African Americans could not buy based on the
covenant, the list was non-African American or predominantly
Anglo Whites.
And then we then have people filing a lawsuit based on
exclusion because they are Black and they can't move in. There
is a list of people who can move in. And everybody who lives
there is White. How do we deal with that kind of an issue?
Mr. Marcus. That is an interesting hypothetical,
Congressman Cleaver.
Mr. Cleaver. It may not be that hypothetical. I am just
creating something, but it may not be that hypothetical.
Mr. Marcus. Either way, it is an interesting one. I do
think that racially restrictive covenants are repugnant. Now, I
have argued in my written testimony and elsewhere that
disparate impact can avert a conflict with the equal protection
clause if the courts allow a good faith affirmative defense. In
my view, that is a way of separating out disparate impact cases
that are based on intentional or unconscious discrimination
from those that are not.
Now, if a court were to apply the sort of standard that I
have suggested, then they would look at this list, which
appears facially neutral. If they find that there is this sort
of impact, that is to say, all of the names are White names,
then one would look at why is that; why are all of the names
White names? Is there some entirely good faith reason? Maybe
they are all family members. Or maybe there is some legitimate
reason.
But if it turns out that there is no good-faith reason, and
that it was intended as a way of excluding numbers of a
particular racial group, then I think that it is discriminatory
and should be considered discriminatory.
Mr. Cleaver. Okay.
Mr. Parker, I want to stay on this.
Mr. Parker. Yes.
And I would also--because there are actually concrete
examples of exactly what you are talking about. Towns which
have restrictions, or that give advantages to current residents
of that town, that can have the impact of excluding people of
color if the town is a single-race town.
There is no allegation of intentional discrimination or a
hatred toward people of color, but the effect is the same. And
the Fair Housing Act looks at the consequence. If you are
excluded from property, if your house is foreclosed on and it
is because of disparate impact, it is little consolation that
it is not the result of some intentional discrimination.
But the consequences are still there. And it is important
that the law recognize the fact that those consequences have
occurred and continue to occur.
Mr. Cleaver. Now, we still have racial covenants--on the
books all over the country, just to my knowledge, they are not
being enforced. The Civil Rights Act said you can't do that, so
public accommodation in most cities eliminated that.
But there are still administered, nobody bothered to clean
it up. So if you go in the courthouses you are going to find
this.
I guess my issue is--in 2013, nobody, nobody is going to
admit discrimination. I mean, nobody. I am talking about nobody
and so, if nobody admits it then they are either
unintentionally committing discriminatory acts or they are
denying that what they are doing is in fact discriminatory.
So I am always concerned about this issue because I think
at this moment in time, we are having some--it is a weird
moment in history. And I am not sure that we need to take too
many steps away from the Civil Rights Acts that have been
passed in the past.
I have gone over my time, Mr. Chairman. I apologize, and I
yield back.
Chairman McHenry. I thank my colleague.
We will now recognize Mr. Duffy for 5 minutes.
Mr. Duffy. Thank you, Mr. Chairman, and I appreciate the
witnesses' testimony this morning and the conversation we are
having on what I think is a very important topic.
I would agree, I think, with everyone today that
discrimination still exists in America. It hasn't been rooted
out, and I think it is incumbent upon the Congress and the
country to do all we can to make sure we do root it out and
make sure it doesn't exist.
But we are not at that point today.
But I do want to have a more in-depth conversation on
disparate impact, and Mr. Kirsanow, I think in your opening
statement, you had indicated that there were potential
unintentional consequences that would negatively affect those
whom you think would be beneficiaries of disparate impact.
And I think you were running out of time, so I wanted to
ask you a follow-up to give you an opportunity to explain that
further, how people could actually be hurt under this theory
who were supposed to be benefited.
Mr. Kirsanow. Yes, thank you, Congressman.
There are a number of examples, but I would like to limit
them to the area which I know best, and that is with respect to
employment law, where you see the greatest amount of litigation
with respect to disparate impact.
We had a hearing just recently at the Civil Rights
Commission against--with respect to the EEOC's relatively new
criminal background check policy, which makes it a little bit
more difficult than it had in the past for employers to conduct
criminal background checks on applicants.
I will cut right to the chase on this. It is well-intended,
it is designed to increase the reentry of felons into the
workplace, something that needs to be done. It is based on the
presumption, the realistic presumption that Black and Hispanic
applicants are more likely to be screened out as the result of
criminal background checks.
But as well-intended as it may be, in many respects it may
be misguided.
I will just give you a little bit of information with
respect to how it harms the intended beneficiaries. The
presumption was that it would increase the probability that
Blacks and Hispanics would be hired because the rigorous nature
of the background check that is employing what is known as the
green standards based on the 11th Circuit, I think it was, case
outlying under what circumstances a criminal background check
would be permissible.
That is, what type of offense was it? Which job are you
applying for? How long ago was the offense? It made the green
standards a little bit more stringent. But at the same time
what happened is, employers, because it was so difficult to
implement the background checks, would abandon their use and
resort to impermissible criteria with which to make hiring
decisions.
There have been several studies that show that where
employers are allowed or have less of a burden, in terms of
having criminal background checks, and use background checks
robustly, they are more likely to hire Black and Hispanic
applicants rather than resort to impermissible stereotypes and
thereby exclude them.
In one study, employers were 4 times more likely--4 is not
a minor matter--to do so. And in another State, 10.7--I will
strike that. Employers who used criminal background checks were
10.7 percent more likely to have recently hired a Black
applicant than those who did not.
And the reason, obviously, is because employers are--they
make judgments and they have to make judgments with respect to
who they are hiring. And they prefer not to have felons, if
they don't know what kind of felony it is.
Mr. Duffy. All right. And I thank you for expanding upon
that. Taking intentional discrimination and setting that aside
for a moment, I would--they exist, and I want to move it over.
But I want to look at the unintentional discrimination, if
you want to call it disparate impact.
If there is no intentional discrimination and we find there
is disparate impact, in the end is the consequence that we have
now different standards for different people? Different
standards if it is based on race or color or sex or national
origin that we will have different standards for different
people, if we find disparate impact in a certain space? Or am I
wrong on that?
Mr. Kirsanow. It is more likely that you have no or lowered
standards. It is--
Mr. Duffy. What was that?
Mr. Kirsanow. It is more likely that rather than having
different standards, you will have lowered standards or no
standards whatsoever.
So that you tend to eliminate the impact as much as
possible. That won't happen, however. In some cases you will
have some slightly different standards, at least that are
unconsciously applied to different protected classes. But what
we have seen, and especially in the employment context is, an
abandonment of standards so that you don't get hit with the
disparate impact liability.
You may see that, kind of the reverse of that in the
Richard--
Mr. Duffy. What is the consequence of far lower standards?
Mr. Kirsanow. The consequence is, in an employment context
for example, you will hire employees who may not make the
grade. They come in, can't make the grade, then get fired. Then
the employer gets sued for disparate treatment, based on that.
Or you get individuals who are not eligible for a
particular loan, they cannot make the payments, or the monthly
payments, and are more likely to be foreclosed upon. So there
are unintended consequences that harm the intended
beneficiaries.
Chairman McHenry. The gentleman's time has expired.
Mr. Duffy. I yield back.
Chairman McHenry. Thank you. We will now recognize Mrs.
Maloney for 5 minutes.
Mrs. Maloney. I would like to thank the chairman and the
ranking member for holding this hearing and really focusing on
this important issue.
The purpose of the Fair Housing Act of 1968 was to reverse
what Bobby Kennedy described as the insidious effect of racial
segregation in housing. And to accomplish this goal, the Fair
Housing Act prohibits housing providers from discriminating on
the basis of race, color, religion, sex, disability, family
status, and national origin.
Earlier this year, HUD issued a final rule stating that a
housing-related practice is discriminatory if it has a so-
called disparate impact on one of those protected classes and
does not serve a legitimate business purpose.
Opponents of this rule argue that it creates too much
uncertainty for lenders. However, it is important to note that
HUD's rule did not change the law in any way, shape, or form;
it just formalized the disparate impact test that HUD and the
Department of Justice had been using for over 40 years.
More importantly, the disparate impact test, contrary to
popular belief, does not punish sound business decisions. All a
housing lender has to do to avoid liability for a business
practice that has a discriminatory effect is show that the
practice serves an important business purpose, and there aren't
less discriminatory ways to serve that same important business
service.
So, I would just call that common sense, and if the end
result of the disparate impact rule is that it forces lenders
to think twice about whether or not there are less
discriminatory ways to accomplish its business objectives, then
I say this is all the better for our country.
I would like to ask Mr. Parker, do the same types of
problems exist, the entrenched residential segregation that
drove Congress to enact the Landmark Fair Housing Act back in
1968, does that still exist today?
Mr. Parker. Many of the problems that existed then continue
to exist. As has been mentioned, there are still instances of
intentional discrimination. But there are also a web of
practices that working together, tend to deprive protected
classes of equal opportunity in housing.
And the example that I gave of the lending market of the
mortgages that were given in the run up to 2008, is a perfect
example that it had a disparate impact on particular
communities and it is an impact that could only be gotten at by
using the disparate impacts standard, because there aren't
individuals whom you can show acted intentionally to
discriminate.
You rely on the statistical evidence to show that there is
a difference in treatment that would result in highly qualified
people of color being denied mortgages or being given mortgages
with terms that are detrimental.
Mrs. Maloney. So you still believe the disparate impact
rule is necessary, and it is necessary as an appropriate
remedy, and you can't get to this determination without the
disparate impact, is that correct?
Mr. Parker. I believe it is at least as necessary as it was
at the time when the Fair Housing Act was passed.
Mrs. Maloney. Given that HUD and the courts have been
enforcing the disparate impact rule for over 40 years now, Mr.
Parker, do you think that lenders and other housing providers
have had sufficient time to adjust and be aware of the rule and
the standards?
Mr. Parker. I think they certainly have.
And, as you pointed out, the disparate impact standard
creates a structure that permits them to assert a legitimate
business interest.
And unless there is a finding that either that interest is
not legitimate or that there is no other way to serve the
goals, then it will stand.
Mrs. Maloney. I am looking at the successful cases that the
Justice Department has brought, using the disparate impact
theory after the financial crisis, and particularly the
Countrywide case that they brought.
Do you think that these cases will have a positive impact
by deterring other lenders from engaging in the same kinds of
practices that Countrywide engaged in, in their lending
practices?
Mr. Parker. Yes, I think it will. And I think it serves the
Nation as a whole because it eliminates the sort of practices
that led to the economic disaster that we had in 2008.
Mrs. Maloney. My time has expired. Thank you very much.
Chairman McHenry. The gentlelady's time has expired.
The gentleman from Illinois, Mr. Hultgren, is recognized
for 5 minutes.
Mr. Hultgren. Thank you, Mr. Chairman.
And thank you all so much for being here today to discuss a
very important topic. I wonder if I could address this first
question to follow up on some of the discussion that my
colleague from Wisconsin, Mr. Duffy, had started. I wanted to
follow up a little bit more, go a little deeper on that.
Commissioner Kirsanow, and Mr. Marcus, I wonder if you
could talk briefly--are neutral practices with the disparate
impact on protected groups necessarily indicative of
intentional discrimination?
Mr. Kirsanow. No, they are not necessarily indicative of
intentional discrimination.
One of the reasons under Griggs v. Duke Power that scholars
say the Supreme Court had adopted the disparate impact standard
was the difficulty in many occasions in proving intentional
disparate treatment, as opposed to disparate outcomes.
Disparate outcomes, you can see, it is quite simple.
Is that necessarily evidence of disparate treatment or
intentional discrimination? Sometimes, as Ken indicated? Yes,
it is. It is smoke, but there is not always fire where there is
smoke.
Mr. Hultgren. Mr. Marcus, any thoughts?
Mr. Marcus. No, it isn't.
I have spent countless hours identifying disparities,
especially in education, to ask the question, is there a
reason, in a particular school district, that certain
minorities have been designated for this or not designated for
that, is there a reason?
And over and over again, I would find legitimate,
nondiscriminatory reasons for it, and then move on.
Once in a while you can't find a legitimate reason, and you
have to conclude at the end of the day, that it was based on
discrimination.
In my view, we need a better test for separating the wheat
from the chaff. The current tests used by HUD, EEOC, and others
don't really do that, in part, I think because they are not
just looking for intentional discrimination, but they are also
looking for other kinds of effects.
And unless we say we are focused on discrimination, on
intentional or even unconscious discrimination, we are going to
pull them all in together. We are going to pull in both
discrimination and also nondiscriminatory effects, and we will
end up with the sorts of consequences that Commissioner
Kirsanow described.
Mr. Hultgren. Mr. Marcus, digging a little deeper on that,
will the Obama Administration's embrace of disparate impact
divert government resources away from combating intentional
discrimination?
Mr. Marcus. It can't help but do that. It is not as if our
civil rights enforcement agencies have so much in the way of
excessive funds that they can look for exotic or extraneous
forms of cases.
When you have to divide the work between as many different
kinds of statutes as they do, and then you are looking not just
for intentional and conscious discrimination, but also other
nondiscriminatory effects, it means at the end of the day you
are not able to do an effective job at enforcing any of the
civil rights statutes.
Mr. Hultgren. Mr. Marcus, based on your experience working
in civil rights enforcement at the Department of Education, the
Department of Housing and Urban Development, and also the Civil
Rights Commission, do you believe using government resources to
fight and overturn neutral practices that have a disparate
impact on minorities, but are not rooted in intentional
discrimination, is the best way to fight discrimination?
Mr. Marcus. No, but I would make one distinction that I
think that Commissioner Kirsanow did as well; there is
intentional discrimination, and there is unconscious
discrimination. And I think both need to be combated.
If someone is intentionally trying to exclude minorities,
we need to fight that. Even if they don't know that is what
they are doing, but they are doing it, we need to fight that,
too.
But if neither exists, then there might be unfortunate
policies, there might be policies that we want to speak out
against because of inequities that we perceive, but if it is
not discrimination, I don't think that we should be focusing
our scarce civil rights resources on them.
Mr. Hultgren. I have less than a minute left. If I can
direct this to Commissioner Kirsanow and Mr. Marcus, if we have
time, will the Obama Administration's insistence on pursuing
disparate impact claims allow cases of intentional
discrimination to go unpunished? And does pursuing disparate
impact make society more vulnerable to intentional
discrimination?
Mr. Kirsanow. It could, because as Mr. Marcus indicated,
when you have limited resources, you have to decide where you
are going to direct those resources.
And when you are talking about disparate impact claims, I
don't want to overstate this, but it is in some respects easier
to make out a case of disparate impact than it is intentional
discrimination. So you go where the money is; you go where you
are more likely to achieve a desired result.
Whether or not--we have a multi-billion dollar apparatus
designed to address discrimination in this country. Even that
may be insufficient. But if you are going to focus on something
that arguably could be in violation of the Equal Protection
Clause, you are diverting resources away from intentional
discrimination, where there is no dispute that we need robust
enforcement activities.
Chairman McHenry. I will now recognize--
Mr. Hultgren. Thanks very much, Commissioner.
I yield back.
Chairman McHenry. We will now recognize the ranking member
of the full Financial Services Committee, Ms. Waters.
Ms. Waters. Thank you very much.
I am sorry that I was not here for the opening of this
hearing. However, it is extremely important that we understand
that the Fair Housing Act established a framework for rooting
out both intentionally discriminatory acts and seemingly
neutral policies that produce a disparate impact on
discriminatory effects on certain groups or populations.
Let me just ask our representative here from the ACLU about
the Department of Justice, which reached a $335 million
settlement with Countrywide, a now defunct mortgage company
owned by Bank of America, the largest fair lending settlement
on record in the United States.
In that case, the Justice Department alleged that more than
200,000 African-American and Hispanic borrowers who qualified
for loans were charged higher fees or placed into subprime
loans while prime loans were provided for White borrowers with
similar financial situations.
As I look through all of the information, I see that
similar actions by lenders such as Wells Fargo and others have
taken place.
Now, in African-American and Latino communities, we have
had foreclosures which have basically caused great harm and
pain in these communities, and we have been struggling trying
to get corrections. We have been struggling trying to make sure
that we give support to the communities, because when they do
these foreclosures, it causes the value of other houses in the
community to go down, et cetera, et cetera.
It has been very harmful, and very painful. How was the
disparate impact legal theory applied in these cases that I am
talking about, in Countrywide in particular? How may the
outcome in the Countrywide case have differed if the victims
were unable to use the disparate impact doctrine?
Mr. Parker. The Countrywide case and similar cases are
perfect examples of the utility of the disparate impact
standard.
It is a perfect example of how the resources that were
expended pursuing that case had an impact that, as you
suggested, affects tens of thousands of African Americans. It
had a profound effect on a large population of people. It
permitted the court to address practices that cost these
communities enormous sums of money.
And all of it was made possible by a standard that could
only--or by a case that could only have been brought using a
disparate impact standard. It would have been impossible for
individuals to show that they were the victims of intentional
discrimination, but they were victims. And the communities of
color have been victims of practices to the tune of tens of
billions of dollars that have been lost to the--
Ms. Waters. If I may, I have a few minutes here.
Mr. Parker. Sorry.
Ms. Waters. This is true of the case against Wells Fargo,
Morgan Stanley, Sun Trust, C&F Mortgage, and even HUD.
And so, the question becomes whether it is intentional or
not, the harm that can be caused, such as we see in these
cases, is significant. And if we did not have disparate impact
to bring these cases, what would happen?
Mr. Parker. We would lose the opportunity to address some
of the biggest problems that are facing our protected classes.
We would deny opportunity to fair housing to a significant part
of the population.
Ms. Waters. Thank you, Mr. Chairman. I yield back the
balance of my time.
Chairman McHenry. I thank the ranking member.
We will now recognize Mr. Barr for 5 minutes.
Mr. Barr. Thank you, Mr. Chairman.
Commissioner Kirsanow, I wanted to explore with you what
the meaning of some of these Federal civil rights statutes
actually is, specifically the statutory authority that some of
these enforcement agencies actually have with respect to
applying the disparate impact theory.
So, what is the meaning of these statutes? Are these
statutes designed to remedy intentional discrimination,
disparate impact, or both?
Mr. Kirsanow. With the exception of the 1991 Civil Rights
Act, which was passed in large measure to address Ward's Cove
Packing, all the other civil rights statutes were designed to
address intentional discrimination, not disparate impact.
Mr. Barr. Okay. And so the statutory language of, for
example, the Fair Housing Act, and the statutory language of
the Equal Credit Opportunity Act, is there any statutory
language that mentions disparate impact?
Mr. Kirsanow. There are rules that mention it or at least
allude to it. But I would have to think about whether or not
there is any statutory language that mentions disparate impact
per se.
Mr. Barr. So putting aside administrative regulations or
rulemakings, does the statutory language authorize these
enforcement agencies to apply disparate impact theory?
Mr. Kirsanow. No, that has been an administrative
prerogative.
Mr. Barr. Okay. So under the Chevron doctrine, which grants
to administrative agencies the ability to issue rules or
interpretations based on a reasonable construction of an
ambiguous statute, are these statutes sufficiently ambiguous--
in your judgment, are these statutes sufficiently ambiguous to
confer the authority upon these agencies to apply disparate
impact theory under Chevron, and are those rulemakings
enforceable under the Chevron deference standard?
Mr. Kirsanow. Right. I believe both under Chevron I and
Chevron II, they would not be. However, having said that, as
was stated in the concurring opinion Ricci v. DeStefano, the
Supreme Court has not yet pronounced on that.
Mr. Barr. So that is an unsettled question?
Mr. Kirsanow. I would say it is still unsettled, but in my
judgment, if you take a critical look, a rigorous look at
Chevron I or Chevron II, the agencies go beyond the statutory
authority in determining their authority under their governing
statute.
Mr. Barr. So the bottom line is that the statutes
themselves do not authorize these agencies to apply disparate
impact, at least not explicitly.
Mr. Kirsanow. Not explicitly.
Mr. Barr. Okay. With respect to the equal protection
arguments and Scalia's concurring opinion in Ricci where he
talks about the fact that there could be a war between
disparate impact and equal protection, would the race-conscious
decision-making that would naturally result from the
application of disparate impact theory survive strict scrutiny
under current Supreme Court precedent?
Mr. Kirsanow. No.
Mr. Barr. Okay. Would application--and let me ask Mr.
Marcus the same question. Would you concur with the
Commissioner's assessment of that, based on current Supreme
Court precedent?
Mr. Marcus. I would agree based on current Supreme Court
precedent and based on the conception of disparate impact that
is in all of the regulatory schemas that you described. I think
it is possible to narrowly construe disparate impact in a way
that saves it, but as currently written, I believe these
disparate impact provisions violate equal protection.
Mr. Barr. And Mr. Marcus, just a follow-up question. My
time is expiring. I have about a minute left, so maybe you
could take the remainder of the time and answer this question
about your earlier testimony. Amplify your earlier testimony,
when you discussed how application of disparate impact theory
could very well harm the intended beneficiaries.
Obviously, the objective of this hearing is to make sure we
don't have discrimination in lending practices in this country.
So, aside from diversion of scarce resources away from
enforcement of intentional discrimination, could there be--or
could you discuss the possibility of denying minorities or
protected classes of people from credit because of application
of disparate impact. Could this have a negative impact on
access to credit for protected classes? And if so, how? How
would application of disparate impact theory harm those
intended beneficiaries, particularly in the way of access to
credit?
Mr. Marcus. It could, and along the lines that Commissioner
Kirsanow also described. I think the problem is that virtually
any facially-neutral standards that are effective for
underwriting are going to create disparate impacts.
So, if a lending institution wants to avoid liability,
there are various things that it could do. One is to introduce
a greater subjective component to eliminate the standards in
question. In the event that it uses a more subjective approach,
there is a greater likelihood of invidious discrimination. To
the extent that it dilutes the criteria, this has the potential
also of undermining the safety and soundness of the institution
and the resulting potential instability certainly harms
everyone.
Chairman McHenry. The gentleman's time has expired. And we
will have to move on here. Thank you, though.
I will now recognize Mr. Ellison for 5 minutes.
Mr. Ellison. Thank you, Mr. Chairman.
And I thank the ranking member.
I am really pleased that we are having this hearing because
there is not enough discussion around civil rights, inclusion
at all. And even if it is cast in this light, we still need to
talk about civil and human rights.
I just want to say, though, that I do find it amusing even
that somebody would suggest that if we try to protect people
from the discrimination that comes in the form of a statistical
imbalance or disparate impact, that could undermine the effort
to stop discrimination.
Nobody who is a victim of discrimination or potentially is
one would ever say such a ridiculous thing. That is the
position of a privileged, comfortable person who really wants
to discriminate, but wants to look good and feel good as they
do it.
This country of ours had legally sanctioned--you could
legally discriminate against somebody because they were Black
for about 346 years in the United States, from 1619 to 1965.
You could say, ``You are Black; you are not allowed to be
here.'' And yet not even, I don't know, not even 60 years pass,
and all of a sudden we are just beyond that, even though we
have disparities in everything.
And of course, we have disparities in everything. If
somebody were to restrict your legal right to freely exercise
your rights for 11 hours, 15 minutes after they stopped saying
they were doing it, admitting they were doing it, you still
would be feeling the effects of it, of course.
Now, this whole conversation I think just is evidence that
people who believe in civil and human rights of all colors
better really get busy because the people who want to recreate
American apartheid are busy, active, and absolutely committed
to reinstituting racial subordination in America.
But you know what? People of all colors oppose the efforts
that some are engaged in. And I think that they need to have as
much vigor as the people who want to recreate a pre-civil
rights America.
So with that, that is just my candid views.
Let me ask this question. I am curious to ask you a
question, Mr. Parker. The disparity in subprime lending and
foreclosure rates among minority communities is indisputable.
According to a 2009 report by the Center for Responsible
Lending, African Americans and Latinos are 47 percent and 45
percent more likely to face foreclosure than Whites. What role
has disparate impact doctrine had in fighting lending
discrimination since the financial crisis?
Mr. Parker. Disparate impact is the main tool for fighting
it. And I think it is important, as you pointed out, to
recognize that in those cases, in the analyses that were done,
they showed that employing correct underwriting standards, that
African Americans and Latinos were still more likely to get
risky subprime loans, in spite of their own creditworthiness.
So all of this discussion about doing things that undercut
credit examinations is completely counter to the reality of
what is happening to communities of color.
Mr. Ellison. Mr. Parker, if--let's just say we didn't have
disparate impact and you had to prove case-by-case that the
people involved in putting together those loans were
intentionally discriminating because of race bias. Would there
be any chance to try to counteract the overall effect of racial
disparity?
Mr. Parker. It would be virtually impossible for a number
of reasons. One is the complexity of the lending process. One
is that you don't know how similarly-situated people are
treated unless you have access to that overall data. So that,
yes, it would be virtually impossible to prove that.
Mr. Ellison. Now, we live in 2013. How many mortgage
lenders do you know who are going to say, ``You are Black; I
don't like you; I don't think you ought to own a home, or if
you do, you ought to have a higher-price mortgage.'' How many
people are saying that? Is that a commonly done thing?
Mr. Parker. It is not commonly done, but I think it is also
necessary to recognize that the disparate impact standard, as
has been suggested, makes it possible to ferret out intentional
discrimination. But more importantly, it makes it possible to
address unjustified practices that have a discriminatory impact
on the basis of a protected category.
Mr. Ellison. But may be arbitrary?
Mr. Parker. That are arbitrary, and as I said, unjustified
or not justified by either business necessity or any other
acceptable goal. And the idea that you would permit that to
continue operating when it serves no legitimate purpose at the
expense of protected classes is completely counter to the
intent of the Fair Housing Act.
Mr. Ellison. Thank you, Mr. Parker. Keep up the good work.
Chairman McHenry. We will now recognize Mr. Rothfus for 5
minutes.
Mr. Rothfus. Thank you, Mr. Chairman.
Mr. Marcus, could you provide your insight on the impact of
disparate impact and how it affects the availability of
mortgages?
Mr. Marcus. Now, that is a very, very, hard question. I
will take a very broad look at it. And what I would say it
this. To the extent that lending institutions are dissuaded
from using nondiscriminatory facially neutral underwriting
standards simply because they have a particular effect that
could create legal liability, they will need to use other kinds
of standards which may be less effective in determining a
credit risk.
And so what that does is ultimately create a weakening of
the financial system.
Mr. Rothfus. We are having this debate right now about
Qualified Mortgages and the ability-to-repay rules that the
Consumer Financial Protection Bureau has come out with. If an
entity like the CFPB were, say, a private sector association
that lending institutions had joined and the CFPB came up with
some guidelines on lending such as the debt-to-income ratio at
43 percent for what is going to be a Qualified Mortgage, and it
were determined under a disparate impact theory that would be
found to disproportionately affect a protected class, might
there be liability for such an association?
Mr. Marcus. There could be. And it seems to me that there
are legitimate enforcement methods of finding intentional
discrimination that don't require any of that. What we found
indication of at HUD is that there are many cases where
minorities are treated less well when they walk into a lending
institution.
It is not as if someone will say, point blank, ``We don't
want to lend to African Americans.'' Of course, that doesn't
happen. But, there are certainly plenty of instances where you
can find that the White person who walks in will be given
information and encouragement, and the minority will be given
discouragement and made to wait.
There are lots of cases in which one can find different
treatment. It is not easy. It often requires very patient
enforcement activity, perhaps with pair testers, but there are
ways of getting at different kinds of discrimination faced by
minorities that don't create this unintended consequence.
Mr. Rothfus. Is it more difficult than to find evidence of
intentional discrimination?
Mr. Marcus. It depends on the particular case, of course.
There are cases in which intentional discrimination is fairly
easy to find. And there are some cases in which people do
explicitly state their prejudice, but they don't--
Mr. Rothfus. If you are observing a practice, for example,
where they are giving more information to White people and less
information to people of color, that is going to be evidence
that you are going to be taking to determine whether there is a
discriminatory intent there.
Mr. Marcus. Yes.
Mr. Rothfus. And it takes some time to do that?
Mr. Marcus. Yes, it takes some time. It takes training and
pair testers or something of that sort, but--
Mr. Rothfus. And resources to do that--
Mr. Marcus. Yes, yes--
Mr. Rothfus. --and to go after individuals like that?
Mr. Marcus. Yes.
Mr. Rothfus. Mr. Kirsanow, how would the defendant assert a
legitimate business interest in the context of defending a
claim rising under disparate impact?
Mr. Kirsanow. One of the problems that any defendant has
whether it is the employment context, the credit context, the
housing context is you don't know going in. It is like the
Laritzen case where I think it was Judge Easterbrook who said,
``You are going into litigation not knowing what standard is
going to apply to you.''
It is the standard that the EEOC establishes for housing--
the HUD establishes or some other entity establishes.
And to go for a moment back to the unintended consequences
and the potential harms to the intended beneficiaries, I think
Congressman Ellison cited the fact that Blacks have a 47
percent to 45 percent greater foreclosure rate.
One of the things that lenders or employers--whoever the
potential charged party does is, they change their standards to
avoid disparate impact liability. And in the context of
changing that standard, what happens then is loans may be let
to people who may not be able to pay those loans back. If it
was a level playing field in terms of the administration of
loans, that is if there were no intentional discrimination you
would think--and on a regression analysis--that Blacks,
Hispanics and Whites would all have the same foreclosure rates.
But that is not the case, which suggests that the changing
or lowering of standards actually has a deleterious impact on
the intended beneficiaries.
Mr. Rothfus. I see my time has expired.
Thank you, Mr. Chairman.
Chairman McHenry. We will now recognize Mrs. Beatty for 5
minutes.
Mrs. Beatty. Thank you so much, Mr. Chairman, and Mr.
Ranking Member.
I have two questions for the witnesses.
Mr. Parker, the Federal courts and the U.S. Government have
applied the disparate impact standards since the 1970s. And the
financial services industry has had very clear guidance, I have
been told, as to the application of the standard since at least
1994 when the Federal agencies with jurisdiction for lending
discrimination issued interagency guidances.
In other words, the industry has known for decades that
they had to conform their businesses with the disparate impact
standards.
Can you point to any evidence whatsoever that the disparate
impact standard has had negative effects on the lending
industry?
Mr. Parker. I can point to no such evidence.
And there are two things I would like to say.
First, the question of the legality of disparate impact is
not unsettled. Every circuit court in the country has upheld
the practice. And so it is the law in every circuit court in
the country.
Second, I would take vigorous exception to the idea that
the financial collapse was due to overregulation or enforcement
of our fair housing laws.
The abandonment of the usual underwriting standards for a
loan-to-value or debt-to-income were not abandoned because
people were afraid that the law would be enforced against them.
It was abandoned because of greed. It was abandoned because
there was a way to make money, and it was money that was made
at the expense of the communities that the laws were designed
to protect.
And to suggest that it was the law that was responsible for
this is outrageous.
Mrs. Beatty. Thank you so much.
Mr. Commissioner, in reading your testimony--and let me
quote--``The Supreme Court originally approved the use of
disparate impact theory in the employment context.
Unfortunately, the theory has metasticized and is being used in
an area of law for which it was never intended. Rather than
being used as a way to prove disparate treatment in cases where
there is no smoking gun, it is now being used in a way to
achieve racial balancing across society...''
I find it amazing, and in light of our history of disparate
treatment in policies and the impact and what we just heard
from Mr. Parker somewhat inappropriate, when I think of the
word ``metasticize.'' Deadly cancer. Something that spreads,
which is negative.
And I guess, I am curious as to why you would use a term to
say this is equivalent now to a deadly cancer that we are
looking in this, especially when our chairman and others have
said there is no place in the marketplace for discrimination.
He didn't say intentional, unintentional, or as a result of
disparate impact. We have come a long way from red-lining and
from the prejudices, and it also made me think--and you can
respond to this--that when you said there is no smoking gun.
I think for many of us who grew up during this era or time,
I don't care if it is the little lady with gloves and a purse
who is standing there and denying me a right because of my skin
color, versus a big smoking gun.
Could you express to us why you chose those words?
Mr. Kirsanow. Absolutely, thank you very much for that
question.
I do think that it is invidious to insist upon outcomes.
Forty years ago--prior to 40 years ago, 50 years ago, 70 years
ago, the outcome was that Whites would be advantaged. That was
the desired outcome. It was wrong then. It is wrong now to seek
a desired outcome on the basis of race. That is clearly in
violation of the equal protection clause.
Today, it may not be as big a problem as it was before,
because maybe the right people are in charge. It all depends on
where you sit. But to make determinations on the basis of race
is antithetical to how this country is supposed to be governed.
It is not a function of equal outcome; it is a function of
equal opportunity.
Mrs. Beatty. Well, unfortunately, some of us don't sit on
that side. And certainly I hope you are not expecting me to
believe that we live in a world that is fair no matter where
you sit.
We wouldn't be having this discussion, in my opinion, if
there was still not discrimination and if there was not an
impact from disparate impact treatment.
Mr. Kirsanow. And Congresswoman, thank you very much for
that, because in fact we have copious mechanisms for dealing
with that. No one at this table is suggesting that intentional
discrimination, disparate treatment not be addressed in a
robust fashion.
What we are talking about here is whether or not designing
a process to yield a specific outcome is what this country
should have. And I would suggest to you that the 14th Amendment
says, no.
Mrs. Beatty. We probably just have a little difference of
opinion and I notice I only have--I am over.
So maybe off-line, we can have another discussion. Thank
you, Mr. Chairman.
Chairman McHenry. I thank my colleague.
Without objection, Mr. Garrett, a member of the full
Financial Services Committee but not a member of the
subcommittee, will have 5 minutes to ask his questions.
Mr. Garrett. I thank the Chair.
And I thank the panel.
So at the end of the day, we are trying to achieve that
goal of fair treatment for everyone. Let me start then with Mr.
Marcus.
You write in your testimony that, ``Potential defendants
would be forced to demonstrate a business necessity for a
policy, and that might not have nondiscriminatory rationales,
but adverse impacts on some groups.''
By doing that, of course, you shift the burden of proof
from the prosecutor to the defendant, which effectively erases
our system in this government of innocent until proven guilty
standard, I would suggest.
Can you tell me how you think this burden shifting will
affect the housing industry per se, and business practices as
well as our judiciary system as a whole?
Mr. Marcus. Their effects are already there. In terms of
the judicial system as a whole--and I might add the civil
rights enforcement system in particular--it shifts our focus
away from where, I believe it should be, which is treating
people differently based on their race, color, ethnicity so on
and so forth.
In terms of the housing market, again, it takes the focus
away from nondiscrimination and towards eliminating disparities
that may have other reasons whatsoever.
Mr. Marcus. With due respect, I don't think I would say for
me that the goal should be fair treatment for everyone, if we
are talking about anti-discrimination laws. There are lots of
ways in which practices may be fair or unfair, but not
necessarily illegal and not necessarily discriminatory. And
given the peculiar evils of discrimination, and given the
narrow resources, I believe that those who are combating
discrimination should be focused on discrimination, and the
goal of eliminating bias, animus, things of that sort.
Mr. Garrett. So, the answer to my question is that the
burden is shifted then in this situation from who is actually
trying to prove it to who is actually having to defend it.
So the burden is no longer on the State or the prosecutor,
if you will, in order to prove that there was this wrong being
done. Now it is on the business entity or the individuals to
prove that it was done right.
Isn't that an unfair shifting of that burden? And how do
you prove that, if you are in that entity?
Mr. Marcus. It may be, but then it may be--
Mr. Garrett. Yes, yes, true, but you have to prove a
business's necessity, I think is--
Mr. Marcus. Yes. To me the concern is not just a shifting
of the burden, but also that the way in which the burden is
defined may make it difficult or impossible, even for innocent,
nondiscriminatory entities to defend themselves.
Mr. Garrett. But is--and that is interesting, that is why
it is interesting, because does that mean because there is not
an identifiable standard as to what the adverse impact effect
would be?
Mr. Marcus. The standards differ slightly. But if the
entity has to show that there wasn't a nondiscriminatory
alternative that lack the same disparities--
Mr. Garrett. Yes.
Mr. Marcus. --then they simply--they are put in a position
where they are not even allowed to demonstrate their innocence.
Mr. Garrett. Right.
Mr. Marcus. The question isn't innocence or guilt, the
question isn't discrimination or nondiscrimination, the
question is whether there is simply a different process that
could have led to a different outcome.
Mr. Garrett. Exactly. I think that is important.
Mr. Kirsanow, you were just getting into the end of Mr.
Rothfus' questions, here, that the impact--that the goal--that
the laudable goal that we may all have here, on both sides of
the aisle, may not actually be achieved at the end of the day
by the intentions that some Members may have here.
You were just getting that at the end of Mr. Rothfus'
questions, when you said, if you do a regression analysis and
you could see how it actually does impact upon certain groups
of people. Can you just elaborate on that--
Mr. Kirsanow. It is the law of unintended consequences. And
what we found at the Civil Rights Commission--
Mr. Garrett. Law of unintended consequences, right.
Mr. Kirsanow. Right, if you take a look at a number of the
studies out there, again, these may be well-intended
initiatives. But good intentions are not necessarily good
results.
Mr. Garrett. Okay.
Mr. Kirsanow. And when you look at some of the results,
both in terms of mortgage lending, credit, and in terms of
employment, what happens when the potential charged party
attempts to avoid liability by getting numbers right, and
thereby possibly changing or lowering standards is, that it can
have a negative outcome at the back end.
That minorities are the ones actually holding the bucket at
the end. Where you have greater number of minorities who are
fired, because they have been hired under standards for which
necessarily under that particular job, they couldn't comply
with, or credit histories, where they couldn't necessarily
sustain a particular mortgage.
One of the reasons--one of the reasons, not the exclusive,
you may have a higher foreclosure rate or a higher default
rate, is because standards were changed or modified to avoid
disparate impact liability.
Mr. Garrett. So, we are hurting the people we are trying to
help eventually. Thank you.
Chairman McHenry. We will now recognize Mr. Heck for 5
minutes.
Mr. Heck. Thank you, Mr. Chairman, and I hope to not use
all 5 minutes.
Is any one of you arguing that there is a material
difference to the victim between intentional discrimination or
unconscious discrimination, or discrimination that is the
consequence of ``unfortunate policies?''
Does any one of you believe that the material impact to the
victim is different?
Mr. Kirsanow. Yes.
I do believe there is a significant material impact to
the--
Mr. Heck. No, no, no. That wasn't my question, sir. My
question is, do you believe there is a material difference to
the victim--
Mr. Kirsanow. Yes.
Mr. Heck. --between these forms of discrimination?
Mr. Kirsanow. Absolutely. Because where a victim is living
in a country where outcomes are determined by race, there is a
material difference. Where you have a disparate impact
standard, or any other kind of standard that yields outcome,
based not on content of character, based not on neutral
characteristics, but on race, then you have a real impact.
Mr. Heck. I feel like we are speaking different languages.
My question is if I am, for example, a person of color, and I
am unable to procure the housing because I am a person of
color, whether that is the lenders' intent or not, it seems to
me the impact on me is the same.
Mr. Kirsanow. I would disagree. Again, if you are living in
a country that doesn't honor the equal protection clause, the
impact on you is different.
Mr. Parker. May I interject?
Mr. Heck. Absolutely, please.
Mr. Parker. If you are a single woman who is evicted from
your apartment because there is a policy of evicting someone
who is the victim of a crime, or there is a crime in the
apartment, spousal abuse, it doesn't matter that the policy was
not implemented out of animus.
The fact is that single mother, who is the victim of abuse,
is now homeless. And the idea that the Fair Housing Laws would
not be able to assist that woman, would not be able to assist a
veteran who is not able to meet a full-time employment status,
but could afford to live in an apartment, the idea that they
are unprotected by the Fair Housing Act is a serious
undercutting of that Act.
Mr. Heck. Mr. Marcus, here is part of what I have heard you
say. You have decried discrimination, evidently, especially the
blatant and intentional forms, those are quotes. I have heard
you discount the use of disparate impacts, either from some
legal question, which I don't understand, given the cumulative
case law.
And that, if unfortunate policies or unconscious
discrimination yield disparate impacts, it is harder to
determine and therefore we shouldn't use scarce resources to
prosecute or litigate?
Mr. Marcus. Yes. I think that there is a huge difference
between being told you can't live here because I don't like
people like you, versus being told you can't live here because
the apartment is unavailable.
I think that there is a very distinct and peculiar harm
that one faces if one is the subject of discrimination.
To amplify, yes, I have argued that civil rights
enforcement should focus on intentional and even unconscious
discrimination.
Mr. Heck. But not unfortunate policies that yield disparate
impacts, and therefore may be, in fact, discriminatory, because
we have scarce resources?
Mr. Marcus. No, the latter, I would--the latter I would go
after if they are discriminatory, meaning that they are
motivated by intentional discrimination or unconscious
discrimination.
And I think that there are times when it is difficult to
ferret it out, the discrimination, using different treatment.
And that is why I have indicated that I think that disparate
impact theories could be used, but I have argued for an
affirmative defense of good faith.
Mr. Heck. In which case, in my 10 seconds remaining, I wish
to strongly associate myself with the comments of Mrs. Beatty
and to suggest, sir, that if you believe that as deep down as
we who are asking questions of this nature do, then I would
have thought that you would have led and ended all of your
comments with an argument for increased resources to ferret out
discrimination, which should not exist in this country.
I yield back the balance of my time, which I don't have.
Chairman McHenry. We will now recognize the ranking member
of the subcommittee, Mr. Green, for the final questioning of
the day.
Mr. Green. Thank you, Mr. Chairman, and let me move quickly
to this notion that you have to have explicit authorization for
a law or a standard to be implemented.
My suspicion is that you would all agree that the
Constitution of the United States of America does not call for
judicial review. Is there anyone who differs with me in terms
of judicial review that is not explicitly mentioned in the
Constitution? And we all know, as first-year law students, that
it is in the case of what? Marbury v. Madison. That is where it
comes from.
So you don't have to have explicit language for a court to
recognize that a standard can be established.
Next point, let's talk about this whole notion, it seems to
me, from some of you, that courts are granting summary
judgments, based upon numbers that are presented.
There are no summary judgments being presented on some sort
of regular basis, with reference to disparate impact.
Mr. Parker, you are a practitioner, how many years you have
been practicing law?
Mr. Parker. Thirty-three.
Mr. Green. And have you handled few or many cases of this
type?
Mr. Parker. Many cases.
Mr. Green. Do you find that summary judgment is the usual
circumstance wherein a defendant has given an affirmative
defense by way of answer?
Mr. Parker. No, I find that, in fact, that the plaintiff is
at a disadvantage in many cases, that it is very difficult to
bring and to prove these cases.
Mr. Green. And do you also find that after disparate impact
has been presented, a defendant still has the opportunity to
refute the evidence that has been shown, such that the
defendant can still prevail?
Mr. Parker. They do have that opportunity, at least once.
Mr. Green. And do you find that--at least once?
Mr. Parker. Yes.
Mr. Green. Do you find that even if the plaintiff then, the
moving party presents additional evidence, the defendant still
has an additional opportunity to refute the last evidence
presented?
Mr. Parker. That is correct.
Mr. Green. So there is a system in place that the courts
have recognized now for some 40 years, working efficaciously
that there seems to be a desire to overturn. Can you quickly
tell me, one more time, because you have said it to others,
what would be the implications of eliminating the disparate
impact standard, not theory, because it is now a standard?
Mr. Parker. The impact of eliminating what has been a long-
standing practice in the courts, in the agencies that enforce
the law, would be to make it difficult, if not impossible, to
show that policies which are unnecessary and unjustified have
an impact on protected classes to the detriment of those
classes.
It would eliminate a whole class of cases, which affect an
enormous number of people.
Mr. Green. I marvel at how a good many people who are
opposed to disparate impact also oppose testing. Testing is the
methodology by which we can ascertain whether or not
discrimination exists also. It seems that I am seeing a lot of
consistency here. Opposed to testing, opposed to disparate
impact, but opposed to invidious discrimination.
How do you prove invidious discrimination other than a guy
shows up with a white cape and a hood? How do you prove it?
You have to have some tools available to you to deal with
people who are intelligent. These people are not idiots. They
understand the consequences of their actions. And many of them
disguise their actions with clever policies.
But the law wasn't intended just to deal with people who
make intentional, overt manifestations. The law is also
designed to deal with good people who set bad policies. Can you
give an example of a good person who may have had a bad policy?
Quickly, because I have a closing statement, Mr. Parker.
Mr. Parker. Yes. One such policy might be, as I mentioned
before, the policy that says you have to be employed in a full-
time job to get an apartment. That would have an impact on
someone who, because of disability--
Mr. Green. A veteran, for example.
Mr. Parker. Right.
Mr. Green. A veteran who has other sources of income. You
should consider all sources of income in deciding to rent, not
just a person having a full-time job. Because there are people
who don't have full-time jobs who can afford the apartment that
you are leasing.
Mr. Parker. And everyone's interest is protected in that
case.
Mr. Green. Thank you.
My closing comment is this. It has always been the
intelligentsia that perpetrates. The ignorant may perpetuate,
but it is the intelligentsia that perpetrates. It was the
intelligentsia that gave us Dred Scott. It was the
intelligentsia that gave us a lot of these laws that we find
ourselves having to overturn. And in fact, we have overcome.
So I would hope that this hearing will not allow us to find
ourselves having to combat some rule or some law that
eventually could overturn 40 years of progress.
I yield back.
Chairman McHenry. The gentleman yields back.
I would like to thank our witnesses today. This hearing was
very informative. Thank you for your time.
The Chair notes that some Members may have additional
questions for this panel, which they may wish to submit in
writing. Without objection, the hearing record will remain open
for 5 legislative days for Members to submit written questions
to these witnesses and to place their responses in the record.
Also, without objection, Members will have 5 legislative days
to submit extraneous materials to the Chair for inclusion in
the record.
This hearing is adjourned.
[Whereupon, at 11:50 a.m., the hearing was adjourned.]
A P P E N D I X
November 19, 2013
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