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F ederal R




D. M c T E E R , J R .


DALLAS. TEXAS 7 5 2 2 2

June 11, 1993

Notice 93-63

The Chief Executive O f fic e r of each
member bank and o th er s concerned in
the Eleventh Federal Reserve D i s t r i c t

Joint Agency Letter Regarding
Discrimination in Lending
To address the concern t h a t some minority consumers and small
business owners are experiencing d isc rim in a tio n by len d er s, federal bank and
t h r i f t supe rv is ors are r e i t e r a t i n g t h e i r commitment to e f f e c t i v e enforcement
of f a i r lending laws and are urging banks and t h r i f t i n s t i t u t i o n s to incr ease
t h e i r f a i r lending a c t i v i t i e s .
In a l e t t e r to a l l banks and t h r i f t s , the heads of th e four agencies
said t h a t d is c ri m i n a t io n s t r i k e s a t a basic t e n e t of a f r e e market system:
equal opportun ity f o r a l l to gain access to bank s e r v i c e s . The l e t t e r s t a te d
t h a t the r e g u l a t o r s expect a ll f in a n c ia l i n s t i t u t i o n s to do t h e i r p a r t to
design programs to ensure access to c r e d i t on a non- discriminatory b a s i s .
The l e t t e r urged special a t t e n t i o n to 11 s p e c i f i c f a i r lending
a c t i v i t i e s , including enhanced employee t r a i n i n g , in t e r n a l second review
programs f o r loan a p p lic a tio n s t h a t might otherwise be denied, p a r t i c i p a t i o n
on m u l t i - l e n d e r mortgage review boards, and a f f ir m a tiv e marketing and c a ll

A copy of the a gencies’ l e t t e r and a copy of the suggested f a i r
lending a c t i v i t i e s are attach ed .

For more information, pleas e co ntact Dean Pankonien a t (214)
922-6154. For a dditional copies of t h i s Bank’ s n o t i c e , please co ntact the
Public A f f a i r s Department a t (214) 922-5254.
Sin cerely yours,

For additional copies, bankers and others are encouraged to use one of the following toll-free numbers in contacting the Federal Reserve Bank of Dallas:
Dallas Office (800) 333-4460; El Paso Branch Intrastate (800) 592-1631, Interstate (800) 351-1012; Houston Branch Intrastate (800) 392-4162,
Interstate (800) 221-0363; San Antonio Branch Intrastate (800) 292-5810.

This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (

May 27, 1993
The federal financial institutions supervisory agencies are deeply concerned that some
minority consumers and small business owners may be experiencing discriminatory treatment in
their efforts to obtain credit from financial institutions. Discrimination in lending, on any prohibited
basis, strikes at the fabric o f both our political commitment to equal opportunity and our economic
commitment to free and competitive markets.
Our agencies are committed to making sure that financial institutions understand their fair
lending obligations and respond appropriately. We will continue to strengthen and refine our fair
lending enforcement activities. Examiners will routinely use HMD A data, as well as other
information, to identify cases which require closer examination. Examiners will then conduct
detailed reviews and comparisons of loan and application files to examine for compliance with fair
lending laws and regulations. The agencies will continue to develop and refine computer-based
programs to facilitate and improve this process. This is part of an ongoing effort to develop tools
that will further help examiners and institutions analyze HMDA data, review examination
procedures and determine how they can be strengthened to detect and deter discrimination in
In cases where examination results or other information suggest probable fair lending
violations, we will cooperate with the U.S. Department of Justice and the Department of Housing
and Urban Development.
We further believe that a sustained national effort to expand and intensify educational
programs for both lenders and consumers is necessary, with an emphasis on greater sensitivity to
fair lending issues. We urge financial institutions to use their maximum creativity to design
appropriate programs. We especially urge consideration of the ideas listed on the appended sheet.
It is clear to the agencies that more needs to be done to assure equal access to credit by
everyone in our country. We expect all financial institutions to participate in this effort.

Federal Reserve System

Acting Chairman
Federal Deposit Insurance Corporation

of the Currency


Use o f an internal second review system for consumer, mortgage and small business loan
applications that would otherwise be denied.
Enhanced employee training that engenders greater sensitivity by financial institution
management, and employees, to racial and cultural differences in our society.
Training of loan application processors to assure that any assistance provided to applicants in
how to best qualify for credit is provided consistently to all loan applicants.
Efforts to ensure that all persons inquiring about credit are provided equivalent information
and encouragement.
Use o f flexible underwriting and appraisal standards that preserve safety and soundness
criteria while responding to special factors in low- and moderate-income and minority
Efforts to encourage equal employment opportunity at all levels throughout the institution,
including lending, credit review, platform and other key positions related to credit
applications and decisions.
Affirmative marketing and call programs designed to assure minority consumers, realtors,
and business owners that credit is available on an equitable basis; marketing may involve
sustained advertising programs covering publications and electronic media that are targeted to
minority audiences.
Ongoing outreach programs that provide the institution with useful information about the
minority community, its resources, credit needs and business opportunities.
Participation on multi-lender Mortgage Review Boards which provide second reviews of
applications rejected by participating lenders.
Participation in public or private subsidy or guarantee programs that would provide financing
on an affordable basis in targeted neighborhoods and communities.
Use o f commissions or other monetary or nonmonetary incentives for loan officers to seek
and make safe and sound consumer and small business loans in minority communities.

Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102