Equal Credit Opportunity. The Riggs National Bank of Washington, D.C., loaned more than $11 million to Samuel Linch and Albert Randolph. To obtain the loan, Linch and Randolph provided personal financial statements. Linch's statement included

Question

substantial assets that he owned jointly with his wife, Marcia. As a condition of the loan, Riggs required that Marcia, as well as Samuel and Albert, sign a personal guaranty for repayment. When the borrowers defaulted, Riggs filed a suit in a federal district court to recover its funds, based on the personal guaranties. The court ruled against the borrowers, who appealed. On what basis might the borrowers argue that Riggs violated the Equal Credit Opportunity Act?

Answer 1

Equal credit opportunity
The borrowers argued in part that Riggs violated the ECOA when it required Marcia's signature on the personal guaranty. They claimed that this violated the ECOA's prohibition on discrimination on the basis of marital status. The U.S. Court of Appeals for the Fourth Circuit upheld the district court's judgment, however. The appellate court acknowledged that the ECOA "prohibit[s] a creditor from requiring a spouse's signature on a note when the applicant individually qualifies for the requested credit." The court explained, however, that "Riggs did not require Marcia Linch to be an additional guarantor until after it had learned that Samuel Linch did not individually own many of the substantial assets which he had listed on the ‘personal' financial statement." Thus, "Riggs did not discriminate against Marcia Linch on the basis of her marital status. Riggs therefore did not violate the ECOA."