In the Bloomberg BNA article “Regulator Wades Into Big Data Swamp,” Morrison & Foerster partner Donald C. Lampe cautions that, despite how lenders are now using alternative data to extend credit, fair-lending laws still apply as defined by the Consumer Financial Protection Bureau.
“The CFPB has recognized the utility of some of these models, but at the same time sounds a cautionary note, which is that fair-lending laws still apply,” he said. “Don't throw out the fair-lending rulebook just because you think you’ve built a better decision engine that can help people get credit who can’t get it to through traditional means. So it’s very much a balancing test.”
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