Fair Lending: The Word from Justice

In a recent speech to the Maryland Bankers Association Compliance Conference, Paul Hancock, Chief, Housing &Civil Enforcement Section stated that the Department of Justice has three priority areas for fair lending enforcement: underwriting, marketing, and pricing.

Hancock observed that the most dangerous practice a CEO can pursue is to believe that because they have no intent to discriminate, no discrimination is occurring in their bank. These bankers are faced with an unpleasant surprise when DOJ finds evidence of discrimination. Hancock stressed that banks need to scrutinize their own practices to be sure that no discrimination occurs within the bank.

Self-assessment should give close attention to underwriting, marketing, and pricing. Hancock includes coaching and extra help in the underwriting category. Marketing includes branch locations and community delineation as well as specific marketing programs.

Pricing and overages are presently being looked at by DOJ in several ways. The good news is that pricing and overages are the subject of investigations of non-bank creditors. The bad news is that DOJ has not reached a conclusion on whether banks should be held accountable for pricing discrimination in loans that they purchase.

Copyright © 1996 Compliance Action. Originally appeared in Compliance Action, Vol. 1, No. 6, 4/96