Full text of Federal Reserve Bank of New York Circulars : Consumer Affairs and Civil Rights Compliance Program of the Federal Reserve System

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

FEDER AL RESERVE BANK
OF NEW YORK

fff CfRfJo ftSSy
March 1, 1979

Consumer Affairs and Civil Rights Compliance Program
of the Federal Reserve System
To All Member Banks, and Others Concerned,
in the Second Federal Reserve District:

Following is the text o f a statement issued by the Board o f Governors o f the Federal Reserve System
announcing the establishment, on a permanent basis, o f an examination and education program to
achieve compliance by member banks with consumer protection and civil rights laws and regulations:
The Federal Reserve Board today [F ebru a ry

5] announced an expanded and strengthened program to im­

prove compliance by member banks with consumer protection laws and regulations for which Congress has assign­
ed responsibilities to the Board.
In March 1977 the Board adopted an experimental, nationwide program o f this kind. The program the Board
has now adopted, on a permanent basis, builds on what has been learned in the twoyears’ operation o f the previous
compliance program, provides for additional staff resources, particularly in specialized consumer law bank ex­
amination and gives added weight to civil rights compliance by banks.
In issuing its Consumer Affairs and Civil Rights Compliance Program the Board said:
The Board believes that any type o f discrimination prohibited by the civil rights laws is detrimental to the
nation and to society. The Board is convinced that such discriminatory practices by banks are not only illegal
but are not in the best interests o f the banks, the communities they serve, or the individuals residing in those
communities. The Board will investigate thoroughly each complaint o f discrimination it receives regarding a
State member bank as well as any indication o f noncompliance revealed during an examination o f a State
member bank. In any instance o f unlawful discrimination, the bank will be accountable for appropriate
remedies and penalties as provided for in the applicable laws and will be required to take prompt action to cor­
rect the violation.
As a key part o f its compliance program, the Board authorized continuation of the Educational-Advisory Ser­
vice Federal Reserve Banks have been operating during the past two years. This involves visits by Federal Reserve
examiners, at the request o f a member bank, to educate the bank’ s personnel in consumer credit protection laws
and regulations, and the responsibilities o f banks under civil rights laws. From April 1977 through 1978 personnel
from Federal Reserve Banks conducted 1,224 Educational-Advisory Service visits to member banks. “ This service
presents the System with a unique opportunity and means by which to enhance its effectiveness in the area o f con­
sumer credit and civil rights,” the Board said. The Reserve Banks reported that the service was well received,
regarded as a valuable means o f instruction and as an effective tool to help banks help themselves to comply with
their consumer credit protection and civil rights responsibilities.




(Over)

Other main elements o f the Federal Reserve compliance program are:
— Specialized Consumer Affairs and Civil Rights Compliance Examinations, by specially trained examiners.
— Dissemination o f a Compliance Handbook intended particularly for the education o f banks and for the use
o f examiners, but to be generally available. This will delineate the consumer laws and regulations to be com­
plied with, describe examination and investigative procedures, and give instructions to examiners on how to
proceed in initiating corrective action.
— Adjustment o f the frequency o f special consumer affairs and civil rights examinations, so that State member
banks with the highest ratings are examined less frequently.
— Continued development o f an expert staff o f Federal Reserve bank examiners, specializing in consumer
affairs and civil rights law, trained mainly in schools conducted by the Board.
— Strengthened and specialized arrangements for handling complaints, with emphasis on investigative follow­
up to complaints o f a serious nature such as those alleging unlawful discrimination in the extension o f credit.
— Operation o f the compliance program through senior officials at Reserve Banks. A compliance section of
the Board’ s Division o f Consumer Affairs will provide information and assistance to the compliance
officers o f the Reserve Banks, with the objective o f providing high quality and uniform assistance to con­
sumers throughout the nation.

Copies o f a description o f the compliance program may be obtained from our Consumer Affairs
Division (Tel. No. 212-791-5919).




Paul

A.

V olcker,

President.