Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: TUESDAY, October 11, 1994 TAG: 9410110133
SECTION: BUSINESS PAGE: B8 EDITION: METRO
SOURCE: ASSOCIATED PRESS NEW YORK
DATELINE: LENGTH: Medium
Paul Hancock, chief of the housing and civil enforcement section, told an American Bankers Association meeting in New York that banks should intensify efforts to police themselves to ensure they're not discriminating against minorities when making loans or providing services in their communities.
``Our goal is to see if we can have voluntary compliance from banks,'' said Hancock, whose section is part of the Justice Department's civil rights division. ``But we will bring suits if we find discrimination.''
The Justice Department's role in enforcing fair lending laws has been a thorn in the banking industry's side over the last two years. Hancock's comments urging voluntary compliance were viewed by some as an attempt to offer an olive branch to the industry.
Banks are required by their regulators, such as the Comptroller of the Currency and the Federal Reserve Board, to lend fairly in their communities. Without a good fair-lending record, banks cannot get permission from the regulators to buy other banks or offer new services.
But Justice - a law enforcement agency, not a bank regulator - has pursued several high-profile discrimination lawsuits against banks under broader equal credit and fair housing laws.
In the most recent case, the department settled a lawsuit in August against Chevy Chase Federal Savings Bank, a Maryland thrift accused of discriminating against minorities by not locating branches in African-American neighborhoods. The thrift agreed to pay $11 million through a loan program and open a branch in communities that were allegedly victimized.
The case broke new ground because the Justice Department looked at the bank's branch locations and found bias rather than looking at whether the bank denied minority loan applications.
In another case that has raised bankers' ire, Justice has threatened to file a discrimination suit against Florida-based Barnett Banks Inc., which won a clean bill of health for its banking record from the Federal Reserve Board, the banking industry's main regulatory body.
``We're getting very contradictory messages,'' Edward Yingling, ABA's director of government relations, told reporters after Hancock's presentation Monday. ``We have the bank regulators, the office of housing and urban development and Justice all looking at us.''
Bankers told Hancock that regulatory examiners are threatening to report even the smallest infraction on fair lending to the Justice Department. Examiners are required under law to refer to Justice discrimination they may uncover when testing banks for adherence to the Community Reinvestment Act, the main anti-discrimination law applied to banks.
Hancock said the examiners may be going too far and need better training.
by CNB