Deadlocked Justices Back Bank on ECOA, Guarantors

By Chris Bruce

March 22 — The U.S. Supreme Court March 22 affirmed a 2014 federal appeals court ruling that said a loan guarantor is not an “applicant” for purposes of marital-status discrimination under the Equal Credit Opportunity Act (ECOA).

The one-sentence order upholds “by an equally divided Court” a decision by the U.S. Court of Appeals for the Eighth Circuit that blocked ECOA discrimination claims by Valerie Hawkins and Janice Patterson against Community Bank of Raymore in Raymore, Mo. 

Hawkins and Patterson, who signed personal guarantees for loans, argued they shouldn't be held to those commitments. They said they were included in the credit process only because they were married to the other loan guarantors.

The court's disposition of the case leaves a split between the Eighth Circuit and the Sixth Circuit, which in 2014 said spousal guarantors may allege marital-status discrimination under ECOA.

The 4-4 ruling marks the first split decision since the death of Justice Antonin Scalia in February.

CFPB Question Mark

The court's action also leaves for another day the role of the Consumer Financial Protection Bureau (CFPB) on such questions — specifically, whether courts should defer to the CFPB's reading of ECOA in Regulation B, which implements the statute. Regulation B bars creditors from requiring spouses to guarantee loans.

The CFPB, which inherited authority for Regulation B and ECOA from the Federal Reserve Board, says guarantors are “applicants” under ECOA.

The Eighth Circuit refused to defer to that reading, saying the Fed overreached and that the statutory language is clear.

“Because the text of the ECOA is unambiguous regarding whether a guarantor constitutes an applicant, we will not defer to the Federal Reserve's interpretation of applicant, and we conclude that a guarantor is not protected from marital-status discrimination by the ECOA,” the court said.

In May, the U.S. Solicitor General filed a brief urging the Supreme Court to reverse the Eighth Circuit, saying the CFPB deserves deference on the question.

Still, Some Clarity

Valerie L. Hletko, a partner with Buckley Sandler in Washington, D.C., who represents institutions and individual clients in litigation, regulatory matters and enforcement actions, March 22 said the brief order, while providing some clarity, leaves other questions hanging.

“There’s not a whole lot to say because there’s no opinion,” Hletko told Bloomberg BNA. “The ongoing circuit split is meaningful, but banks have a reasonable degree of assurance that they may obtain guaranties from spouses of married business owners. But it would have been nice to have more direction, especially on the deference issue, with respect to the rule’s overreach itself. That question is still out there.”

The case was argued in October.

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To contact the editor responsible for this story: Mike Ferullo at

For More Information

The Supreme Court's order is at