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FEDERAL RESERVE BANK OF NEW YORK O ctober 21, 1981 EQUAL CREDIT OPPORTUNITY AND FAIR HOUSING ACTS Policy Statement on Enforcement by State Member Banks To A ll State M em ber Banks in the S eco n d Federal Reserve District: Follow ing is the text o f a statem ent issued O ctober 13 by the Board o f Governors o f the Federal Reserve System : T h e Federal Reserve Board has adopted a policy statem ent on enforcem ent by State member banks o f the E qu al Credit O pportunity and F air Housing A cts. T h e policy statem ent was recommended to the Board , and to the other Federal financial institutions’ regulators, by the Federal Financial Institutions Exam ination C ouncil. T h e objective o f the policy statem ent is to ensure that the rights o f credit applicants are protected by requir ing creditors to take corrective action for certain, m ore serious past violations o f the two A cts, and to be in com pliance in the future. T he policy statem ent reminds State member banks o f their responsibilities under the A cts, and notes t h a t __ while it is the policy o f the Board to encourage voluntary correction and com pliance with the A cts — it is the intention o f the Federal Reserve to enforce the A cts vigorously. T he statem ent requires creditors to take m easures to insure against repetition o f violations o f the A cts. It states that failure to comply with certain specific provisions o f the A cts — set forth in the policy statem ent — are regarded as being particulary serious. Failures to com ply in these areas would usually w arrant action designed to correct conditions resulting from violations occurring within two years prior to the discovery o f the violations. In this connection the Board also adopted a supervisory enforcem ent guide recommended by the E xam ina tion C ou ncil, for use by Federal Reserve enforcem ent personnel in connection with the policy statement. Printed on the following pages is the text o f the policy statem ent. Questions on this matter (and requests for the supervisory enforcem ent guide) may be directed to our Regulations Division (Tel. No. 212-791-5914). ANTHONY M . SOLOMON, President. BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM Equal Credit Opportunity Act and Fair Housing Act Enforcement Policy Statement SUMMARY This document sets forth the general policies that the Board of Governors of the Federal Reserve System will generally apply in enforcing the Equal Credit Opportunity Act and the Fair Housing Act. The Board believes it appropriate to remind State member banks of their responsibilities under these laws and that the Board will vigorously enforce them. State member banks will be required to institute procedures to assure that all violations of the Acts, including those not cited in this Policy Statement, will not recur. In addition, failure to comply with certain specific provisions of the Acts has been judged by the Board to be particularly serious and usually to warrant retrospective action to correct the conditions resulting from the violations. ENFORCEMENT POLICY STATEMENT AUTHORITY This Enforcement Policy Statement is issued pursuant to the Board's authority under the Equal Credit Opportunity Act (ECOA) (15 U.S.C. 1691, et sec[.), the Fair Housin9 Act (42 u -s-c * 3601, et seq.), and 8(b) of the Federal Deposit Insurance Act (12 U.S.C. 1818(b)). ENFORCEMENT POLICY STATEMENT The objective of this Enforcement Policy Statement is to ensure that the rights of credit applicants are protected by requiring State member banks to take corrective action for certain, more serious past violations of the Equal - 2- Credit Opportunity and Fair Housing Acts as well as to be in compliance in the future. In an effort to achieve that objective, the Board will encourage voluntary correction and compliance with the Acts. Whenever violations addressed by this Policy Statement are discovered, the State member bank will be required to take action to ensure such violations will not recur and to correct the effects of violations discovered. The Board generally will require the State member bank to take action to correct conditions resulting from violations occurring within 24 months prior to the discovery of violations by the Board, except for violations concerning adverse action notices for which corrective action will be required for violations occurring within six months prior to discovery. Violations in the following areas are considered serious by the Board and will usually be subject to retrospective corrective action: o Discouraging applicants on a prohibited basis in violation of the Fair Housing Act or Sections 202.4 or 202.5(a) of Regulation B. o Using credit criteria in a discriminatory manner in evaluating applica tions in violation of the Fair Housing Act or Sections 202.4 through 202.7 of Regulation B. o Imposing different terms on a prohibited basis in violation of the Fair Housing Act or Section 202.4 or 202.6(b) of Regulation B. o Requiring cosigners, guarantors or the like on a prohibited basis in violation of Section 202.7(d) of Regulation B. o Failing to furnish separate credit histories as required by Section 202.10 of Regulation B. ° Failing to provide an adequate notice of adverse action under Section 202 9 of Regulation B. -3- This Policy Statement will neither preclude the use of any administra tive authority that the Board possesses to enforce these laws, nor limit the Board's discretion to take other action to correct conditions resulting from violations of these laws, nor preclude referral of cases to the Attorney General. Additionally, this Policy Statement does not foreclose a credit applicant's right to bring civil action under the Equal Credit Opportunity or Fair Housing Acts or to file a complaint with the Department of Justice or the Department of Housing and Urban Development for violations of housing laws. Further this Policy Statement does not supersede or substitute for any regulations or enforcement policies issued by the Board or the Department of Housing and Urban Development under the Fair Housing Act.
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