The Trump administration wants to make it much harder to sue for alleged discriminatory housing practices.
The controversial move sets up a classic capitalist argument. Which side you come down on likely depends on your confidence in free enterprise. It also could have a lasting effect — for better or worse — on affordable housing in the Tampa Bay area, which many observers say has reached crisis levels.
For years, banks, landlords, developers and others in the housing industry could wind up in court for unintentionally discriminating against minority groups. That is, they created policies that they did not think were discriminatory but turned out to be.
Plaintiffs attorneys didn't have to prove that an apartment owner purposefully refused to lease to African-Americans. They only had to show that the owner had a policy that led to discrimination, deliberately or not.
It's a potent legal tool, known as "disparate impact."
A new rule pushed by the Department of Housing and Urban Development lays out much more stringent standards for plaintiffs to prove their cases. The five-part test includes a requirement to show that statistical disparities were caused by specific policies, not by chance.
Liberal housing advocates contend that the changes amount to an insurmountable burden that will leave minorities vulnerable to discrimination. They've used the existing rule to overturn discriminatory zoning rules and to go after unfair insurance practices. The Justice Department has used the law to collect more than $500 million from companies accused of bias against minorities.
The advocates argue that lawsuits keep profit-driven companies honest. Those that step over the line know they face a legal slapping.
A particular worry centers on mathematical algorithms, which companies use for pricing, credit scores, marketing and insurance underwriting.
Algorithms "can have starkly discriminatory effects but can operate as a hidden box," the National Fair Housing Alliance said late last week. The "proposed rule could effectively immunize such covert discrimination."
Banks, developers and insurance companies like (and pushed for) the new rule. Why wouldn't they? It means fewer lawsuits, many of which they call frivolous.
They also argue that the threat of getting dinged for inadvertent discrimination curtails innovation. It makes them less likely to experiment with new practices that could promote more affordable housing or lower the cost of insurance. Algorithms could help with those breakthroughs, if only they felt confident they wouldn't get sued for even trying.
Disparate impact "can have unintended consequences, such as causing financial institutions to shrink their operations rather than risk litigation, hurting the very groups it is intended to help," said American Bankers Association president and chief executive Frank Keating in a news release.
Housing and Urban Development Secretary Ben Carson said the rule change would increase "access to fair and affordable housing."
The rule cannot officially take effect until after a 60-day comment period. Could unshackling banks and insurance companies help fill Tampa Bay's affordable housing void? Or will it have the opposite effect?
We could be just a few months from finding out.
Contact Graham Brink at firstname.lastname@example.org. Follow @GrahamBrink.