Judge Rejects the ‘Disparate Impact’ Fraud

113_2014_thomas-perez8201_c0-112-3670-2251_s561x327On Monday, one of the Obama administration’s foremost racial arsonists was given his comeuppance by a federal judge. Labor Secretary Thomas Perez, who is on the American left’s short list for replacing U.S. Attorney General Eric Holder, was informed by Judge Richard J. Leon that his effort to find housing discrimination where none existed amounted to “wishful thinking on steroids.”

Perez sought to apply the policy of “disparate impact” to housing. Judicial Watch explains this contemptible concept. “Under the theory of ‘disparate impact,’ a defendant can be held liable for discrimination for a race-neutral policy that statistically disadvantages a specific minority group even if that negative ‘impact’ was neither foreseen nor intended,” they write. “In such cases, defendants can be forced to pay for harm caused not by their own actions, but by economic and statistical realities, even if beyond their control.” (italics original)

Leon wasn’t buying it. He characterized the attempt to legitimize disparate impact as a vehicle to expand the possibility of filing discrimination cases as “hutzpah (sic) (bordering on desperation).” “This is yet another example of an administrative agency trying desperately to write into law that which Congress never intended to sanction,” he wrote, adding that the arguments made by Obama administration attorneys were “nothing less than an artful misinterpretation” of the law.

The law to which Leon referred is the Fair Housing Act, administered by the U.S. Department of Housing and Urban Development (HUD). In February 2013, HUD made disparate impact a policy tool, one the administration employed to build discriminatory cases against mortgage lending institutions that garnered them hundreds of millions of dollars.

In July of that year, Wells Fargo paid a $175 million settlement after the Department of Justice (DOJ) accused the bank of discriminating against thousands black and Hispanic borrowers—based on loan analyses made by the bank and its independent brokers from the years 2004 and 2009. Wells Fargo admitted no wrongdoing, claiming it was settling to avoid even costlier litigation expenses. That windfall was topped by a record-setting $335 million settlement made by Bank of America in 2011, following allegations of discrimination by Countrywide Lending, purchased by Bank of America in 2008. Once again the feds used disparate impact to allege that minority borrowers had received less favorable borrowing terms than whites.

Perez is an old hand at this shakedown racket. In 2011, the DOJ created the Fair Lending Unit staffed with more than 20 lawyers, economists and statisticians, determined to ferret out discriminatory lending practices at the more than 60 banks that were targeted at the time. The man in charge of that division was Special Counsel for Fair Lending Eric Halperin. Halperin ultimately answered to none other than Tom Perez, who headed the DOJ’s Civil Rights Division.

That would be the same Tom Perez who compared bankers to KKK Klansmen, insisting the only difference between the two groups was that bankers discriminate “with a smile” and “fine print,” but were nonetheless “every bit as destructive as the cross burned in a neighborhood.”

That would also be the same Tom Perez who in 2010 railed against the housing meltdown “fueled in large part by risky and irresponsible lending practices that allowed too many Americans to get unsustainable or unaffordable home loans.” It was then he promised that once the Fair Housing Unit was up and running, it “will use every tool in our arsenal, including, but not limited to, disparate impact theory.”

Perez is determined to protect disparate impact theory from being adjudicated by the Supreme Court. On Nov. 7, 2011 the Court agreed to hear Magner v. Gallagher, a case about racial discrimination in housing. As the Weekly Standard reveals, a Supreme Court decision on the theory was utterly anathema to Perez, whose effort to make the case “go away” became his self-admitted “top priority.” The case was about several property owners who alleged that St. Paul, Minnesota’s ramped up enforcement of the city’s housing code for rental units reduced the availability of low-income rentals, creating a disparate impact affecting black Americans. The district court tossed the suit, but the U.S. Court of Appeals for the Eighth Circuit reinstated it, complete with the concept of disparate impact. The city appealed that ruling to the Supreme Court, which was poised to decide for the first time whether disparate impact cases pursued under the auspices of the Fair Housing Act can be brought before the courts.

Perez, who has referred to disparate impact as the “lynchpin” of his civil rights agenda, didn’t want to take that chance. He managed to get the city to drop its case from the Supreme Court docket. Judicial Watch provided some of the sordid details, noting they had obtained documents “under the Minnesota Data Practices Act, showing that St. Paul City Attorney Sara Grewing arranged a meeting between the then-chief of DOJ’s Civil Rights Division, current Secretary of Labor Tom Perez, and Mayor Chris Coleman a week before the city’s withdrawal from the case, captioned Magner v. Gallagher. Following Perez’s visit, the city withdrew its case and thanked DOJ and officials at HUD for their involvement.”

In June of 2013, the Supreme Court agreed to hear another case revolving around disparate impact. Township of Mount Holly v. Mount Holly Gardens Citizens concerned the town’s efforts to redevelop a blighted neighborhood. A group of renters filed suit alleging the move violated the FHA because the majority of the renters were non-white and they were unable to afford the new mid-priced, single-family dwellings. The district court dismissed the argument ruling all the renters were equally affected. The Court of Appeals for the Third Circuit reversed that ruling, basing their decision on disparate impact.

Once again Perez prevailed, getting Mt. Holly to drop the case, and once again preventing the Supreme Court from issuing a ruling on disparate impact.

Judge Leon noticed. In a stunning rebuke of Perez himself, Leon accused the Labor Secretary of gaming the system, timing cases and arranging the aforementioned settlements he found “particularly troubling.”

It ought to trouble every American that the Obama administration remains determined to codify racial discrimination based on the idea that statistics can be a viable substitute for actual intent. To image how absurd this theory truly is, one need only apply it to the National Basketball Association where a “disproportionate” number of black American athletes, relative to the percentage of the nations’s overall population, earn a living.  Should white college basketball players who weren’t drafted by the NBA be able to file a lawsuit alleging discrimination, based on nothing more than that statistical discrepancy? Absent the necessity of proving intent to discriminate, the power of the government to file discrimination charges become virtually unlimited.

Leon noted there was nothing in the wording of the FHA or anything he read regarding Congress’s intent when it passed the FHA that supported HUD’s interpretation of the law. He further noted that complying with disparate impact theories would force various entities to compile information on a number of factors, including race, religion, gender, etc., that those entities are often banned from obtaining under state law.

Perez may be forced to work overtime yet again. The Supreme Court has agreed to hear Texas Department of Housing and Community Affairs v. The Inclusive Communities Project. State officials have been sued by the Inclusive Communities Project, a Dallas-based group advocating integrated housing. The ICP alleges the state allocated a disproportionate number of federal low-income housing tax credits to minority neighborhoods, a practice that “makes dwellings unavailable in particular areas, thereby perpetuating residential segregation in the Dallas area,” the group said in court papers. The federal appeals court that ruled in favor of the plaintiffs is one of 11 that have determined the Fair Housing Act allows disparate-impact claims. Texas officials, led by Attorney General Greg Abbott, are eager to have the Supreme Court hear the case. “The far-reaching scope of disparate-impact liability makes this a question of exceptional importance,” they said in their appeal.

The Equal Credit Opportunity Act used to hammer Wells Fargo and Bank of America may also be affected by the ruling. Miami attorney Paul Hancock, who filed a brief backing the Lone Star state on behalf of business groups led by the American Bankers Association, illuminated the implications if the Court decides to leave the theory of disparate impact intact. “It really pushes more toward advancement of racial quotas as the only way to avoid legal claims,” he said in a phone interview.

Disparate impact may do far more than that. After the election, the Obama administration intends to push its “Affirmatively Furthering Fair Housing” agenda. It requires HUD to gather data on segregation and discrimination. That data that will be used to racially diversify every city and suburb in America, superseding all local zoning ordinances and forcing those cities and suburbs to accept subsidized housing. “Geospatial data” will pinpoint alleged segregation hotspots that will be forced to comply with HUD’s efforts to racially balance the entire nation. “Unfortunately, in too many of our hardest hit communities, no matter how hard a child or her parents work, the life chances of that child, even her lifespan, is determined by the zip code she grows up in. This is simply wrong,” said HUD Secretary Shaun Donovan when he unveiled the federal rule at the NAACP convention in July.

That’s nothing less than an exponential expansion of the disparate impact theory.

By the time you read this, it is likely we will know which party controls the Senate. If it is Republicans, one of the first orders of business should be making it clear that Tom Perez’s chance of succeeding Eric Holder are zero. It will send a clear message that racial huckstering based on dubious legal theories will no longer be tolerated. After that, pruning as many race-addled zealots from HUD as possible would be a nice follow up.

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  • Well Done

    A politically motivated, arrogant, and entirely dishonest move by a divisive, arrogant, and dishonest administration… and a move that costs bank customers money. But, the left don’t care about that… they think every problem can be solved by higher corporate taxes, though they must know that only increases prices to customers. That means the left don’t really care about anyone except their know-nothing voters and their corrupt financial backers.

    • nimbii

      Agree, Perez is a leftist with a chip on his shoulder, pure and simple.

    • mjsmart

      He needs a bullet

  • steve b

    FINALLY – A JUDGE WHO FOLLOWS THE LAW, NOT HIS OR HER POLITICAL VIEWS!

  • tagalog

    There is no logical impediment to a lawsuit over the disparate impact on white basketball and football players of the disproportionate number of black basketball and football players in professional sports. None whatsoever.

    Disparate impact law by the way is an outstanding example of the shortcomings of reason in approaching the issues of life. Reason has great value, but it’s not everything.

    • ed_in_tx

      The misapplication of statistics in furtherance of a political agenda is not reason. Reason would hold that an entity can not be held liable, and punished, for an outcome which was unforeseeable, unintended and thus unpreventable.

      But perhaps we differ on the definition of “reason”.

      • empiresentry

        just wondering how they intended to defend the outcomes of such a program with their same statics.
        .
        Its along the line of school spending in Cleveland. To reduce drop out/failure rates, buy all new schools and equipment. The failure/drop out rate climbs so they claim they need more money.
        .
        As with all leftists, the individual’s problems are because of some other group or society, therefore, the only solution is to change society and put them in charge of it. Fails every time.

    • johninohio1

      Anything that can be shown to be bad ‘reasoning’ is due to false/incomplete information or simply pretense dressed up as reason.

      The simple diagnosis here is that correlation does not prove causation, and unspoken, unexamined presumptions are at the root of it–In this particular case, that racism is the causative factor. That cannot be taken as the cause until every other possibility has been examined. But the lazy will not, and the demagogues dare not.

      • MarilynA

        Let’s face it. Most poor people are poor because they lack the intelligence or will to put forth the effort required to succeed. No amount of Government assistance or court rulings are going to change that. The saddest thing is that our government has encouraged, via it’s poverty programs, this underclass to increase it’s numbers by procreating great numbers of similar offspring who lack the intelligence or will to succeed, so that these “eaters” now outnumber the producers. No longer do we let those unable to survive die but we now hook them up to machines at the cost of hundreds of thousands of dollars per year so that they can be an added burden to society. We are now spending more on those who will never be able to contribute to society than we are on the education of those who are expected to bear the burden of supporting this growing army of misfits.

        • johninohio1

          I think we need to make a distinction between those who are able bodied and unemployed and those who are disabled and unemployable. The primary cause of people being unemployed is government meddling in the market place for the sake of campaign contributions and to maintain an army of dependent voters. We need low skilled jobs in order to employ low skilled people, because not everyone can be trained to be a computer programmer, for example. Government needs to change the policies that drive away or draw away labor intensive production. If we could boost the economy in this fashion, we will be better able to take care of the disabled and old.

  • Hard Little Machine

    The failure to provide evidence of racism is of course, racism. This is the same thinking that UFOlogists use to prove the existence of space aliens. This is the same thinking that conspiracy theorists trot out to prove that 1,517 people had a direct hand in the assassination of JFK and that each and every one of them took that secret with them to the grave with 100% perfection.

    • empiresentry

      the racism is demanding that an entire race be scattered from one end of a city to another, breaking up voter blocks and representation, cultural centers and neighborhoods.
      But, being the racist he is, Perez fails to recognize that.

  • Race_Dissident

    Were disparate impact to be functionally demolished, it would be an infinitely greater victory for sanity than the ouster of Democrats from Congress.

  • nimbii

    if Perez’ hearings take place during the lame duck, how does the author propose Reps will block his appointment except that a few decent Dems may help stop it?

  • empiresentry

    Imagine that: white neighborhoods will be punished because blacks want to live with other blacks and Hispanics want to live in Hispanic neighborhoods. Go figure.
    .
    Then when housing projects are fixed up, the people that fix them up are sued, well, because they fixed them up and charge more under HUD section 8 guidelines.
    .
    Perez also wants to make sure that his minorities of choice and flavor of the week get reduce and government subsidized loans and lower home prices (determined by Perez) if they are located within the HUD identified ethnic clusters. Ethnic cluster busting.. as if letists can’t stop sc rew ing everything up enough as it is.
    .
    Want to shut down people’s individual choices and the housing market? Put a Marxist in charge. Now they will define where and when I can buy a house and what neighborhood it will be in.

  • mjsmart

    Also Atlas Shrugged. I shrugged, retiring from the surgical practice that we (my wife & I) built. I took my income tax dollars, my education (which I paid for in full), and my skills away from those who don’t deserve it. Let it crumble under the weight of the entitled.

  • Waiting

    Some people are trouble makers, breakers of law, trying to be a law unto themselves. In this case, that means he wants to be above the law by which he is supposed to abide. The Judge recognized this about this racist troublemaker.

  • SoCalMike

    Too bad Perez doesn’t suffer a horse whipping.
    Such would be too good for this malignant parasite.

  • Roha Waha

    It is clear to everyone that this is just an Al Sharpton/Jesse Jackson style Race Hustle Shake Down of the banks, now being perpetrated in plain site of the public by the Dept. of Labor and backed by the Dept. of Justice. I assure you if investigated, you will find the bank’s were Persuaded ” read Blackmailed” to make large contributions to Acorn,LaRaza and Open Borders USA.. My anger for the deceitful Godless evil left is only surpassed by my anger of the Apathetic American People. And the our gutless representatives who’s apathy will ,”not might” destroy a once Great And Just Nation !

  • Pericles

    “By the time you read this, it is likely we will know which party
    controls the Senate. If it is Republicans, one of the first orders of
    business should be making it clear that Tom Perez’s chance of succeeding
    Eric Holder are zero.”

    The new Republican Congress will have to get involved, unfortunately, in a lot of UNDOING of Obama policies and ideological agendas and a thorough cleansing of the leftist contamination in MANY government bureaucracies. When Obama was elected it was a ‘package deal’. All his leftist followers and relatives followed him to Washington DC. They will all have to be evacuated or expelled.

  • hitz

    What about the fact that 99% of prisoners in jail are male? Isn’t this evidence of disparate impact?

  • Dan Knight

    Thank you Arnold for a solid explanation of ‘disparate impact,’ and Perez’s involvement in the recent cases.