Investor’s Business Daily recently featured an article on how the Obama administration is expanding affirmation action without using the legislative process. The Department of Labor has advised FDIC-insured banks to implement affirmative action programs. The Department of Housing and Urban Development (HUD) is taking legal action against Westchester, New York and other suburbs to force them to accept the construction of low-income housing. HUD objects to landlords who refuse to rent to tenants who rely on subsidies under the federal government’s Section 8 housing program. The Equal Employment Opportunity Commission (EEOC) has warned businesses that automatically disqualifying job applicants on the basis of arrest and/or conviction history may prompt a lawsuit because certain racial groups are overrepresented among the convicted. The Obama administration is targeting auto lender and home lenders such as Wells Fargo who make high-interest loans to minorities. Under the legal theory of disparate impact, a lender who charges applicants of a racial group a higher average rate than members of another group faces a potential lawsuit. Even if there is a rational, racially-neutral explanation for the discrepancy- such as the applicants’ respective credit scores- the lender is essentially presumed guilty until it offers rebutting evidence.
Even the field of education is not safe; the Justice Department is suing Louisiana to block a state law promoting school vouchers on the ground that it would exacerbate segregation patterns in schools. In addition, the Education Department is investigating schools that discipline a disproportionately high number of black students. Rather than fight the presumption of guilt, many schools and businesses will tailor their policies to avoid a confrontation with the activist Obama administration. Such changes can include making fewer loans, hiring fewer employees, and relaxing discipline in schools. These changes will have adverse effects, of course, but the effects are likely to be diffuse and thus are unlikely to attract the attention they deserve.