Operating on a level playing field

Tres contra uno

Whether we admit it or not, we all subscribe to some concept of “fair”.  However, just as beauty is in the eye of the beholder, fair is also largely subjective.  What is fair to me may not seem fair to you.

For example, it is well-known in financial circles that banks are not fond of credit unions.  While we run in similar circles, banks pay taxes and have strict capital requirements. Credit unions pay no taxes and, historically, their regulator has looked the other way when credit unions have levels of capital that would cause bank regulators heart palpitations.  In other words, the playing field isn’t level and there are competitive advantages that stem from the lack of fair-ness.

<end soap box>

An element of the fairness issue that has been gathering steam in the lending world and now is impacting retail sellers is the idea of disparate impact.  If you’ve been reading this blog, you’re now quite familiar with how the CFPB is using disparate impact to force the hands of auto dealers on how payments to dealers are structured.

The Supreme Court recently issued a decision that changes the legal landscape in a way that could affect some discrimination claims.  In this American Banker article on the topic, the discussion is on the applicability of the case to municipal discrimination suits (for actual case details, see SCOTUSblog), but more generally, the Court established that certain laws must be narrowly applied to the parties directly impacted instead of all parties indirectly impacted.  This is a stark deviation from existing interpretations of law.

What does this mean for contractors?  Nothing today unless you’re involved in a suit of the specific type covered in the case.  But if the legal environment were a tapestry, the picture had started to favor those who made a claim of harm regardless of their distance from the actors.  For example, cities claiming that bank discrimination (disparate impact) hurt their tax revenues.  This Supreme Court case doesn’t completely change the picture, but long-forgotten shadings of fair-ness are seeing new light.  It is possible that retail sellers and banks alike will soon enjoy that level playing field under the law.  The long list of threats to our existence as commercial entities might just be a little shorter today.

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