SCOTUS – SPOUSAL GUARANTORS

On March 22, 2016 the Supreme Court of the United States (SCOTUS) rendered a 4-4 split decision, that consisted of one-sentence, that effectively affirmed an Eighth Circuit ruling that dismissed a lawsuit in which two women argued Community Bank of Raymore improperly forced them to act as guarantors for loans extended to their husbands.

The Eighth Circuit held that the Federal Reserve Board’s Regulation B spousal guarantor rule (12 C.F.R. 202.0(e)), which extended Equal Credit Opportunity Act protections for applicants to spousal guarantors, was not entitled to judicial deference. The circuit court concluded that the plain language of the statute unambiguously excludes spousal guarantors.

The Supreme Court’s decision, Hawkins et al. v.Community Bank of Raymore, the first 4-4 split following the death of Justice Antonin Scalia, invalidates the Fed’s spousal guarantee rule, but only in states in the Eighth Circuit’s jurisdiction.

The Eighth Circuit includes the states of:

  • Arkansas
  • Iowa
  • Minnesota
  • Missouri
  • Nebraska
  • North Dakota
  • South Dakota

The rest of the nation should look for similar cases, with similar decisions. Then look for congress to take action to fill this gaping hole in spousal protection rules.

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