The Federal Government Just Outlawed LGBTQ Discrimination in Credit

Loan them the money!


The federal government just accomplished a decadeslong goal of LGBTQ advocates with a single letter.

Since 1974, progressives have sought to broaden federal civil rights laws’ ban on “sex discrimination” to encompass discrimination on the basis of sexual orientation and what we today call gender identity. One key area where LGBTQ people need protection is credit—bank loans, mortgages, brokerage services, and the like. Now the Consumer Financial Protection Bureau, a federal agency, has declared that the Equal Credit Opportunity Act’s sex discrimination ban encompasses sexual orientation and gender identity. This guidance effectively prohibits creditors like banks, retailers, credit card companies, finance companies, and credit unions from engaging in anti-LGBTQ discrimination.

The CFPB announced its new guidance in response to an inquiry from an advocacy group called SAGE (Services and Advocacy for GLBT Elders). Older LGBTQ people are more likely to live in poverty than others due to a lifetime of discrimination; this discrimination can extend through retirement, when creditors may hesitate to provide financial assistance out of ignorance or animus. SAGE already worked closely with the Department of Housing and Urban Development to help that agency clarify that its Equal Access Rule protected LGBTQ people from discrimination in Department of Housing and Urban Development–financed housing. In June, it asked the CFPB whether it “views credit discrimination on the bases of gender identity and sexual orientation … as forms of sex discrimination prohibited under the ECOA.”

It was a good question. Over the last several decades, courts and agencies have expanded the scope of “sex discrimination” bans to encompass both anti-trans and anti-gay discrimination. The Supreme Court itself seemingly affirmed this expansive interpretation of sex discrimination in a 1989 decision holding that sex stereotyping—bias against gender nonconformity—constitutes discrimination “on the basis of sex.” From that decision, courts have intuited that discrimination against LGBTQ people is itself sex discrimination: Transgender people, after all, are not conforming with the sex they were assigned at birth, and gay and bisexual people aren’t conforming to the stereotype that they should only be attracted to the opposite sex.

In response to these legal developments, the CFPB informed SAGE that it does indeed read the ECOA to outlaw “credit discrimination on the bases of gender identity and sexual orientation.” The CFPB encouraged SAGE (and anyone else) to report “any situations in which creditors treat applicants less favorably” because they are LGBTQ. Forbidding anti-LGBTQ credit discrimination, the agency concluded, is “important and relevant to ensuring fair, equitable, and nondiscriminatory access to credit for both individuals and communities.”

I asked SAGE’s CEO, Michael Adams, what he thought of the CFPB’s guidance.

“LGBT older people face higher poverty rates than their non-LGBT peers, while facing disproportionate rates of social isolation,” he told me. “This means that they don’t always have a support network in place when facing challenges related to finances. The CFPB’s clarification with respect to the Equal Credit Opportunity Act moves the ball forward in ensuring that LGBT older people have access to credit on an equal playing field.”

Laura E. Durso, the senior director of LGBT Progress at the Center for American Progress, agreed.

“This is welcome news to LGBT people applying for mortgages, small business loans, and accessing other types of credit that keep us participating in today’s economy,” she said. “At a time when LGBT people are more likely than their peers to experience economic instability, these protections help ensure that LGBT people aren’t unfairly turned away from systems meant to help them build more prosperous lives for themselves and their families.”

Incidentally, the inclusion of a sex discrimination ban in the Equal Credit Opportunity Act was about as carefully planned and considered as the inclusion of an identical provision in the Civil Rights Act. Rep. Lindy Boggs—a Louisiana Democrat who took husband Hale Boggs’ seat after he died in a plane crash—was serving on the Committee on Banking and Currency in 1974 when the bill was proposed. Its early drafts made no mention of sex. Without telling her colleagues, Boggs added a provision forbidding discrimination on the basis of sex and marital status. She then photocopied new versions of the bill and passed them around to the rest of the committee.

“Knowing the members composing this committee as well as I do,” she explained to them,” I’m sure it was just an oversight that we didn’t have ‘sex’ or ‘marital status’ included. I’ve taken care of that, and I trust it meets with the committee’s approval.”

The bill passed the committee by a unanimous vote.