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Statement by

P h ilip C. Jackson, Jr.

Member, Board o f Governors o f the Federal Reserve System

before the
Committee on Banking, Housing and Urban A ffa ir s

U.S. Senate

November 23, 1976

Thank you, Mr. Chairman,

for the opportunity to appear on

behalf of the Board of Governors to discuss some issues relating
to the Fair Housing, Equal Credit Opportunity, and Home Mortgage
Disclosure Acts.

We have responded by letter (a copy of which

is attached to m y written statement) to the specific questions
furnished by the Committee, and, therefore,

I would like to sum­

marize recent activity by the Board and the Reserve Banks in the
consumer field in general.
Following two public hearings spread over three days
and the review of approximately 650 written comments, the Board
has published a second proposed revision of Regulation B to in­
corporate the 1976 amendments to the Equal Credit Opportunity Act.
We are endeavoring to promulgate a final version of the regulation
by early January so that creditors and consumers will have the
opportunity to become familiar with its provisions prior to its
effective date on March 23, 1977.
After a public hearing and analysis of comments, amend­
ments to Regulation Z to implement the Consumer Leasing Act were
issued in mid-October.

In that area, we are now preparing sample

disclosure forms in order to assist lessors in their compliance.
A new Regulation AA, providing procedures for consumer
complaints, became effective on September 27.

The number of con­

sumer complaints has increased substantially since this regulation
was promulgated.

In addition, the Board is developing a new consumer

complaint control system, to better monitor and analyze the flow
and types of complaints.




- 2 -

The Board w ill sh ortly decide on a p p lica tion s fo r
exemption from the requirements o f the Home Mortgage Disclosure
Act on the part o f certa in State-chartered depository in s t it u t io n s
in C a lifo r n ia , I l l i n o i s , Massachusetts, and New York.

In a dd ition ,

the Board's s t a f f has been responding to numerous in q u iries from
depository in s t it u t io n s , public o f f i c i a l s , and a few private
c it iz e n s regarding the requirements o f the Act, as implemented by
the Board's Regulation C.

Following the i n i t i a l September 30 d i s ­

closure deadline, the Reserve Banks have examined approximately
s i x t y - f i v e State member banks for compliance with Regulation C and
have investigated and resolved complaints against three oth ers.
The Board, in conjunction with the Reserve Banks, is
expanding i t s educational a c t i v i t i e s in two d ir e c t io n s .

B elieving

that a higher le v el o f awareness and understanding w ill in turn
produce a higher lev el o f compliance, the Board is increasing i t s
e f f o r t s to educate and a ssis t State member banks, p a r tic u la r ly small
ones, in how to comply with the many consumer regulations a f f e c t in g
th eir operations.

The Board is also attempting, through s t a f f

p a rticip a tio n in public forums and the preparation o f explanatory
m aterials, to heighten the le v e l o f awareness o f consumers regarding
their rights and remedies under the various consumer re g u la tio n s .
The Federal Reserve System has decided to i n i t i a t e a program
o f sp ecia l consumer regulation compliance examinations for State member
banks; f o r t y - f i v e such examinations have already been conducted.

To

implement this d e cisio n , a sp ecia l consumer compliance examination
school was held in late September to expand the training o f examiners




- 3 -

regarding the requirements o f the consumer c r e d it re g u la tion s and
methods o f enforcing them.

Another eight-day school w i l l be held

at the end o f th is month, and four more sessions are planned in
each o f the next two years.
A sp ecia l task force from the Board and the Reserve Banks
is cu rren tly studying a number o f issues concerning the examination
and enforcement p rocess.

It is con siderin g , among other items, s p e cia l

consumer reg u la tion examination procedures (in c lu d in g the preparation
o f examination manuals and other m a te r ia ls ), appropriate remedies fo r
various types o f v i o l a t i o n s , and ways to expand and improve i n f o r ­
mational serv ices for c r e d it o r s and consumers.

The task fo rce plans

to report i t s recommendations to the Board by the end o f th is year.
F in a lly , the new Consumer Advisory Council has been
esta b lish e d . The tw enty-six members were selected from over 400
candidates whose names were submitted follow ing the Board's
s o l i c i t a t i o n o f the names o f h ighly q u a lifie d in d iv id u a ls.

The

C ou n cil's chairman is Mrs. Leonor Sullivan, a distinguish ed member
o f the House o f Representatives, and the v ic e chairman is Professor
William Warren, Dean o f the University o f C a lifo rn ia Law School
at Los Angeles.

The other twenty-four members are distinguished

representatives with academic, consumer, and industry backgrounds.
B rie f biogra ph ica l sketches regarding each co u n cil member are attached
to my written statement.
The Council met i n i t i a l l y on November 10 and 11.

It

discussed issues involving the e f f e c t s te s t under the Equal
Credit Opportunity Act and Regulation B, ways to id e n t if y unfair




- 4 -

and deceptive banking practices under the Federal Trade Commission
Improvement Act, and simplification of the Truth-in-Lending
disclosures under Regulation Z.

Four meetings of the Council

are scheduled for 1977.
With that summary as background, I would like now to turn
to the concern evidenced in your letters of September 29 and November 8
regarding the Board's intended use of the loan information available
under the Home Mortgage Disclosure Act.
Let me reiterate first that a System-wide special task force
is studying this question, along with other enforcement matters.

How­

ever, the present prospect is that home mortgage disclosure data
will have limited usefulness in monitoring compliance with the Fair
Housing and Equal Credit Opportunity Acts.

The reason for its

limited usefulness is threefold.
First, the Home Mortgage Disclosure Act was designed not
as an enforcement tool but as a means whereby depositors and local
public officials could learn how particular depository institutions
invested the deposits entrusted to them.
Second, the Act was intended to shed light on local mortgage
lending patterns and therefore focuses on disclosure of the geographic
location of mortgaged property.

The Fair Housing and Equal Credit

Opportunity Acts, on the other hand, are anti-discrimination
statutes, focusing on the personal characteristics of borrowers.
Thus, an analysis of urban mortgage loan data will not necessarily
reveal anything about discrimination on the basis of an applicant's
race, national origin, religion, sex, marital status, or age.




- 5 -

Finally, the Home Mortgage Disclosure Act does not provide
any information on the number of applications received by an institution
relating to a particular geographic area.

Without data on loan demand, an

examiner cannot effectively use the loan disclosure figures presently
available to uncover possible signs of illegal discrimination.
In contrast to the Home Mortgage Disclosure Act, the Equal
Credit Opportunity Act and implementing Regulation B provide more
appropriate and useful tools for monitoring compliance with antidiscrimination laws.

First, they clearly delineate those lending

activities that are impermissible, thereby providing lenders and
examiners with solid benchmarks by which to judge particular lending
practices.

Second, Regulation B requires that records be retained

on rejected as well as accepted applications, allowing examiners
to note the location of the real property offered as security and
the financial characteristics of that class of applicants that may
have been impermissibly discriminated against - that is, those who
were turned down.
Finally, if the Board adopts the proposed revision of
Regulation B that was recently issued for comment,

information

will also be available for examination purposes on the race
and national origin, sex, marital status, and age of residential
real estate loan applicants that voluntarily provide that information..
While preliminary indications are that the home mortgage
disclosure information may not be very useful in monitoring compliance
with anti-discrimination laws, the Board's staff intends to







- 6 -

consult with o f f i c i a l s in C a lifo r n ia , I l l i n o i s , Massachusetts, and
New York to determine what use, i f any, i s being made o f the data
av ailab le under the d isclo su re laws o f these States.

The Board has

a lso indicated i t s w illingness to cooperate with the FDIC and
FHLBB in any e f f o r t on th e ir part to c o l l e c t and analyze mortgage
d isclo su re data from in s tit u t io n s in the t h ir t y la rg e st standard
metropolitan s t a t i s t i c a l areas, should that appear f e a s ib le .
F in a lly , the Board w i l l be interested in reviewing the preliminary
re su lts o f the jo i n t Comptroller-FDIC p i l o t study o f mortgage
applicant and loan information.
In any event, as a consequence o f the Home Mortgage Dis­
closure Act d isclo su re s and the Board's new consumer complaint
procedures, more consumer complaints are l i k e l y to be brought to our
a tte n tion .

These complaints w i l l aid the compliance monitoring

process by pointing toward the need fo r examination o f the banks
in v olv ed .
I appreciate th is opportunity to appear b e fo re the committee
on beh a lf o f the Board and to be o f assistance to you.

I would

be pleased to respond to any questions that you may have.

W I L L IA M P R O X M I R E , W l S . , C H A IR M A N
JOH N S P A R K M A N , A L A .
H A R R IS O N "'A . W I L L IA M S , J R ., N .J ,
T HOM AS J . M C IN T Y K E , N .H .
A L A N C R A N S T O N , C A L IF .
A DLA I E . S T E V E N S O N , I L L .
JOSEPH R . B ID E N , J R ., D E L .
R O B E R T M O R G A N , N .C .

JOHN T O W E R , T E X .
EDW ARD W . BROOKE, M A S S .
BOB P A C K W O O D , O R E G .
J E S S E H E L M S , N .C .
JA K E G A R N , UTAH

K E N N E T H A . M C L E A N , S T A F F D IRECTO R
A N T H O N Y T . C L U F F , M IN O R IT Y S T A F F D IRE CTO R
M A R Y F R A N C E S D E L A P A V A , CH IEF CL E R K

C O M M I T T E E O N B A N K IN G , H O U S IN G A N D U R B A N A F F A IR S
W A S H IN G T O N . D .C .

20510

November 8, 1976

The Honorable Arthur F. Burns
Chairman
Federal Reserve Board
Federal Reserve System
Washington,
D. C.
Dear Chairman Burns:
In preparation for our oversight hearings November 23,
it would be helpful to have responses to the following
questions in writing prior to the hearing.
This was the Committee’s practice in our last oversight
hearing in this area, and I believe it proved very useful
in saving hearing time to explore some of these issues in
greater detail.
1)
Is it the Board's position that simple racial and
sex notation and record keeping under the Equal Credit
Opportunity Act will facilitate enforcement of fair lending
rights provided by the 1968 Civil Rights and by ECOA?
2) Has the Board done any spot checks to determine
whether institutions are complying with the Home Mortgage
Disclosure Act?
Has the Board investigated complaints in­
volving institutions that allegedly failed to make public
the required data?
If so, what action was taken?
3) Pending determination of whether state disclosure
laws in four states provide a mortgage disclosure program
"substantially similar" to the Federal Mortgage Disclosure
Act, are you currently requiring all insured institutions
in those states £New York, Massachusetts, California, and
Illinois) to compile the reports required by Federal law?
4) What use do you plan to have examiners make of
the Mortgage Disclosure data in their regular periodic
examinations?
5) What use do you plan to have examiners make of
the ECOA racial notations, once they are approved by the
Federal Reserve Board?




Honorable Arthur Burns

Page 2

November 8, 1976

6) Since the Committee's last oversight hearings
in March 1976, what changes or improvements have you
made in your examiners' fair lending compliance program.
Specifically, have you expanded the training program for
examiners in the areas of civil rights and consumer
rights?
Have you expanded the review procedures used in
examinations? Please provide the Committee with a copy
of all relevant training material.
7)
In cases where lenders appear to adopt different
criteria for minority and majority applicants and/or
white and integrated or minority neighborhoods, what would
be an appropriate remedy, in your view?
Have you ever
imposed such a remedy?
8) What arrangements do you have to refer pattern or
practice cases to the Justice Department for action under
Title 8?
9) Based on the 1974 pilot survey by the Federal
financial supervisory agencies, have you examined any
institutions which seemed to be avoiding making real estate
loans to minority borrowers or minority neighborhoods?

,

According to your letter of last March 9 at that time
your civil rights enforcement program was limited to the
use of a civil rights questionnaire to be completed by the
examiner.
In that letter, you indicated that data is
developed "on the proportion of real estate- loans to
minorities to the total of the bank's real estate loans
outstanding." What is done with these data? What does
the examiner do when he finds the proportion to be sus­
piciously low? How many cases have you had where any
behavior change on the part of the lender was requested
by the Board?
I would very much appreciate your reply by November 19
so I can better prepare for the hearing on the 23rd.

Cha i r m a n '
W P :bkg




ó’fGOVf*.-.
o
C H A IR M A N O F T H E B O A R D O F G O V E R N O R S
FEDERAL RESERVE SYSTEM
W A SH IN G TO N , D. C. 2 0 5 51

November 19, 1976

The Honorable William Proxmire
Chairman
Committee on Banking, Housing and
Urban A ffa ir s
United States Senate
Washington, D.C. 20510
Dear Mr. Chairman:
I am pleased to respond on beh a lf o f the Board o f Governors
to the questions that you asked in your l e t t e r o f November 8, in
preparation for an oversight hearing on November 23, regarding the
Board*s enforcement a c t i v i t i e s under the Fair Housing, Equal Credit
Opportunity, and Home Mortgage Disclosure A cts. Our answers to the
questions are attached to th is l e t t e r . The unnumbered questions
set forth in the next to la s t paragraph o f your l e t t e r are answered
under number 10.
I hope that you w i l l find t h is information u s e fu l. Governor
Jackson i s looking forward to t e s t i f y i n g before the Committee next
week, and he w il l be glad to respond to any further questions at that
tim e.




Sin cerely yours,

Arthur F. Burns

Answers to Questions in Chairman Proxmire's
Letter of November 8, 1976

(1) On November 3 the Board issued for public comment
a second proposed revision of its Equal Credit Opportunity regula­
tion (Regulation B).

The proposal contains provisions that would

require creditors making certain residential mortgage loans to re­
quest information regarding the race and national origin, sex,
marital status, and age of applicants.

Various civil rights and

w o m e n 1s organizations, the Justice Department, the Federal Trade
Commission, the Department of Housing and Urban Development, and
others have recommended that some form of notation and record
keeping be required as a tool to monitor compliance with the Fair
Housing and Equal Credit Opportunity laws.

In determining whether

to adopt such a requirement in the regulation, the Board will carefully
consider the views expressed by those respondents, as well as any
further comments on this subject submitted in response to the recent
republication of Regulation B.
(2) The Board, in conjunction with the Reserve Banks, is
developing uniform examination procedures for monitoring compliance
with all consumer credit regulations for which the Board has enforcement
authority.

(This effort will be discussed at greater length in

connection with your sixth question.)

As a part of this process,

several Reserve Banks have started conducting special consumer regulation
compliance examinations of State member banks.




About forty-five

- 2 -

of these examinations have been conducted since September 30, when
the initial home mortgage disclosure statements were required to
be made publicly available under the Bo a r d 1s Regulation C.

Fifteen

of the forty-five banks examined were subject to the Regulation
C disclosure requirements and were checked for compliance.

In addition,

the Reserve Banks have made approximately fifty , spot checks1 to
f
1
determine if the disclosure statements had been prepared and made
available to the public.
The Board has not received any specific complaints
concerning the availability of mortgage disclosure data, but three
complaints have been received and investigated by the Reserve Banks.
Based on the examinations that were conducted and the complaints
that were investigated,

five State member banks have been found

not to be in full compliance with Regulation C requirements.

In

three instances involving relatively small banks where the officers
were not familiar with the new requirements, the disclosure statements
either were not prepared or were improperly prepared.

In those cases,

the examiners have explained the applicable requirements and instructed
the banks to comply, which they have done or are in the process
of doing; and the examiners have rechecked or will recheck those
banks to insure that compliance is achieved.

In two cases, the disclosure

statements were not made publicly available in the manner prescribed
in Regulation C.




These problems have also been corrected.

- 3 -

(3)

Regulation C provides that during the time that the

Board is considering an exemption application filed by September 30,
State-chartered depository institutions subject to the State laws
upon which the application is based do not have to prepare a dis­
closure statement for the last full fiscal year ending prior to
July 1, 1976.

Since the applications relating to institutions

subject to the disclosure laws of California, Illinois, Massachusetts,
and New York were submitted to the Board prior to September 30,
those institutions have not had to comply with the September 30
disclosure requirements of Regulation C.

If an exemption application

is denied, then the institutions covered by that application will
have to make the statement available within sixty days.

This

grace period applies only to exemption applications received prior to
September 30, affects only disclosure of pre-July data, and was intended
to eliminate the burden of dual reporting in the event that a State
was determined to have a , substantially similar1 law.
f
1
(4) A special Reserve System task force is studying how Home
Mortgage Disclosure Act data may be used in the examination process to
determine possible illegal discrimination in mortgage lending.

(The task

force's responsibilities will be discussed further in answer to
question six.) However, the present prospect is that home mortgage
disclosure data will have limited use in the compliance enforcement
process.
The disclosure Act was designed not as an enforcement tool
but as a means whereby the public could learn how local institutions




invested the deposits entrusted to them.

In furnishing the public

with th is information, the Act provides only a partial picture o f
r e sid e n tia l mortgage lending a c t i v i t y .

For example, i t does not

require the d isclosu re o f information regarding re je c te d loan a p p li­
ca tio n s .

In con tra st, Regulation B, with i t s requirement that lenders

reta in a l l records concerning an a p p lic a tio n , w ill provide an examiner
with a much better factual basis to determine whether a State member
bank is engaging in i l l e g a l lending a c t i v i t y .

The information available

under Regulation B w ill include the geographic lo ca tio n o f the c o l l a t e r a l
not only for approved loans but also for a p p lica tion s that were r e je c t e d .
Furthermore, the use o f presently a v a ila b le mortgage
d is c lo s u r e information to detect p ossib le discrim ination on the
basis o f an a p p lica n t's personal c h a r a c t e r is t ic s or the demographic
c h a r a c t e r i s t i c s o f a neighborhood, without further data c o l l e c t i o n
and rete n tion , would involve a lengthy and d eta iled analysis o f
Census Bureau information that is now s ix years o ld . Again, Regulation
B, i f i t is adopted in it s proposed form, would at least provide
information regarding each a p p lic a n t's race and national o r i e i n ,
sex, marital status, and age; and, through i t s record retention
requirement, i t would also make a vailab le ce rta in basic financial
information about each a pp lican t.
Despite these preliminary in d ica tion s that the Federal home
mortgage d isclosu re data have lim ited usefulness in the examination pro­
c e s s , the Board's s t a f f intends to consult with o f f i c i a l s in C a lifo r n ia ,
I l l i n o i s , Massachusetts, and New York to determine what use, i f any, is
being made o f the data a vailab le under the d is c lo s u r e laws o f these
S ta tes.




The Board has also indicated i t s w illin g n ess to cooperate

- 5 -

with the Federal Deposit Insurance Corporation and Federal Home
Loan Bank Board in any e f f o r t on th eir part to c o l l e c t and analyze
mortgage d isclosu re data from in s t it u t io n s in the t h ir t y largest
standard metropolitan s t a t i s t i c a l a rea s, should that appear f e a s s ib le .
F in a lly , the Board w ill be interested in reviewing the preliminary
re su lts o f the jo in t Comptroller-FDIC p i l o t study o f mortgage
applicant and loan information.
The public a v a i l a b i l i t y o f the Home Mortgage Disclosure
Act data may b e n efit the monitoring process by generating more
consumer in te re s t and attention and thus complaints about a lle g ed ly
discrim in atory p r a c t ic e s .

The complaints w ill in turn lead to

intensive compliance examinations o f in s tit u t io n s whose p ra ctices
appear to discrim inate impermissibly.
(5 ) Answering your f i f t h question at th is juncture is d i f f i c u l t
since the provision o f Regulation B r e la t in g to data notation and
monitoring is subject to change as a resu lt o f a dd ition a l comments
now being s o l i c i t e d from the p u b lic .

In a d d itio n , the sp ecial

System task force working to develop p ra c t ic a l enforcement techniques
has not submitted i t s recommendations.
(6) The System has taken a number o f p o s it iv e steps in
recent months to expand and improve i t s program o f consumer com­
pliance enforcement.

One o f the most a ffirm a tiv e o f these actions

is the expansion o f the System's e f f o r t s to educate and a ssis t
State member banks, e s p e c ia lly small ones, in complying with
the many consumer reg u la tion s.

The Board b e lie v e s that a higher

le v e l o f awareness and understanding on the part o f member banks
w i l l in turn produce a higher le v e l o f compliance.




- 6 -

As mentioned in the response* to question two, the System has
re ce n tly in it ia t e d sp e cia l examinations to monitor compliance with con­
sumer regulations, and th is has required several additional a c tio n s .
In order to have q u a lifie d examination personnel, a consumer a f f a i r s
school has been e sta b lish ed . The f i r s t session was held during the
week o f September 27.
November 29.

A second, eight-day session w i l l start on

Four additional school sessions are planned for each

o f the next two years.

A copy o f the proposed agenda for the fo rth ­

coming school is attached to this l e t t e r .

Of course, each Svsten

examiner also attends regular assista nt examiner and examiner schools
where consumer regulations and examination techniques are d iscussed.
A System-wide task force has been established and is
developing plans to implement those education and examination programs.
It i s preparing recommendations on issues such as:
. Special examination procedures designed to monitor con­
sumer regulation compliance.

This p roject includes

preparing examination manuals, check l i s t s , work papers,
and re p o rts.
. Review procedures to determine the e ff e c t iv e n e s s o f the
examination process as a means o f enforcement.
. What actions should be taken i f various kinds o f
v io la t io n s are discovered.
. E ffe ctiv e means o f u t i l i z i n g the System's Public I n fo r­
mation Program to inform c r e d it o r s and consumers
about consumer regulations and consumer rig h ts.
The task force a n ticip a tes submitting i t s report and recommendations
to the Board by the end o f the year.




- 7 -

F in a lly , the Board is seeking the advice o f i t s new
Consumer Advisory Council on a wide range o f issues concerning
the Board's r e s p o n s i b i l i t i e s in the consumer c r e d it f i e l d .
(7) As was mentioned in the answer to the previous
question, th is is one o f the issues being addressed by the sp e cia l
task f o r c e .

The recent amendments to the Equal Credit Opportunity

Act have provided for a more d e f i n i t i v e concept o f discrim inatory
lending.

In response to those amendments, the Board is studying

not only the means whereby i l l e g a l discrim inatory lending p ra ctice s
may be d iscov ered , but also the appropriate remedies that may
be employed i f various types o f regulatory v io la t io n s are found.
(8 )

Under a long-standing arrangement, the Board re fe rs

to the Department o f Justice for appropriate enforcement action any
cases in which i t appears probable that State memnber banks have
vio la ted criminal statutes and regulations to which they are su b ject.
The probable v io la t io n s may be discovered in the course o f examinations
or through other channels, such as bank holding company a p p lica tio n s .
Referral to the Department o f J ustice is made only a f t e r thorough
in v e stig a tion and consideration by the Board and the Reserve Banks.
An interagency Memorandum o f Understanding was recen tly
agreed upon for the exchange o f information re la tin g to f a ir lending
complaints at the stage when the complaints are received by
the supervisory agency.

The p arties to the agreement are the

Department o f Housing and Urban Development, the Department o f
J u s t ic e , the Comptroller o f the Currency, the Federal Deposit In­
surance Corporation, the Federal Home Loan Bank Board, and the




- 8 -

Board o f Governors.

Under the Memorandum o f Understanding, each

supervisory agency provides H D with a copy o f a l l complaints
U
received by the agency r e la t in g to d iscrim in ation in r e s id e n t ia l
mortgage financing, with an in d ica tio n o f the a ctio n taken or con­
templated by the agency regarding the complaint.

HUD, in turn,

furnishes the Department o f Justice with a monthly l i s t i n g o f
fin a n c ia l in s t it u t io n s against which complaints have been f i l e d .
The agreement a lso provides that the supervisory a gencies,
in th e ir d is c r e t io n , may r e fe r cases r e f l e c t i n g p o s s ib le discrim in ation
in mortgage lending d i r e c t l y to the J u stice Department.

Such r e fe r r a l

would be made by the Board in accordance with normal procedures
when in v e stig a tio n indicated that there was a seriou s b a sis for
the complaint and probable cause to b e lie v e that a v i o l a t i o n had
taken p la ce .
(9 )

The p i l o t Fair Housing information survey a ctu a lly

involved three surveys.

The Form A survey was designed and conducted

by the FHLBB; the Form B survey was designed and conducted j o i n t l y
by the Federal Reserve and the FDIC; and the Form C survey was
designed and ca rried out by the Comptroller.
Thirteen State member banks p a r tic ip a te d in the Form B
survey.

The Board's s t a f f analyzed the data fo r those banks for

in d ica tion s o f d iscrim in atory lending p r a c t ic e s .

As a re su lt o f

that a n a ly s is , two banks p a r tic ip a t in g in the survey were examined,
but no evidence o f i l l e g a l discrim in ation was d isco v ered .







- 9 -

Late this spring, the Board obtained from the FIILBB
and the Comptroller the raw data from the Form A and C surveys.
Thirty-one State member banks participa ted in the Form A survey and
seventeen in the Form C survey.
data and has in itia t e d

The Board's s t a f f has analyzed these

fieLd in v estig a tion s o f several o f those

inst itut io n s .
(10)

The civiL rights questionnaire (a copy o f which is

attached) was developed in 1971 to serve examiners as a t o o l in
determining whether banks were complying with the requirements
of

T it le VIII o f the C iv il Rights Act o f 1968 and to apprise

bank* .'I the* scope o f the Act.
Tho questionnaire was not designed to gather s t a t i s t i c a l
data io r a n a ly tica l purposes, and, as indicated in the legend at the
b*'gjnnin>- o f the form, the data on the form are based on estimates
both o i management and o f the examiner completing the form,
wns-«

1y , the data are used on an individual bank basis by the

exariim*r, and no e f f o r t is made to compile the data for a l l State
m
er,ib«:.i banks for analytical purposes.

While examiners have not

uncovered evidence o f i l l e g a l discrim ination through the use o f the
quest ion n a ire , they have discussed with mana^em^r.t the: requiremonts
o f the C iv il Rights Act and the bank's e f f o r t s to comply with i t .
The Reserve Banks have founc! these in fo rm 1 confe.rvinc«-;s e f f e c t i v e
in helping prevent i l l e g a l discrim ination and have not found further
formal action necessary.

CONSUMER AFFAIRS
School for Examiners
November 29 through December 8, 1976
becona bessu
---- --------- ----- -------------- -— — ____________________ Curriculum.
I
Period

Time

1

9:00
10:00

2

10:05
11:05

3
i

i
j
!

11:15
12:15

Monday
November 29
Introductory
Comments
Gov# Jackson

Tuesday
November 30
Reg. C.
R. Plows

Existing
ECO
A. Geary
D. Smith

Reg. C.
Forms Review
and Case
Study

cont.

Case Study
Class Review

Wednesday
December 1
Fair Housing
Case Study
Review
8eg. 2
E. Schmelzer
Reg. Z
Film

4

5

L

1:45
2:45

|
j
6

7

2:50
3:50

4:00
5:00

Event ng
Aesig nments




I .
.
ECO Forms
| Review
A. Slbert
Reg. B & E00
Forms ; Case
Study - 1

U

N

Fair Housing & Closed End
new Reg. B
Credit
N. Butler
M. Stewart
A. Slbert
JL_ Ms! and _
Reg. B.
Case Study-2
Analysis

Reg. B
Case Study - 1
Case Study-2
Class Review
Class Review

Read
Analyze
Reg. B.
Fair Housing
Case Study * 2 Case Study

Reg. Z
Case Study
Closed End
Credit
Case itudy
Class Review

Thursday
December 2
Closed End
Credit
M. Stewart
E. Maiand
Closed End
Credit
Case Study
Closed End
Credit
Case Study
Class Review

C

Consumer
Education
C. Aldrich
Consumer
Complaint
Procedures &
Reg. AA
K. Casev
RESPA &
Unfair & De­
ceptive Pract.
M. Medvin
Analyze RESPA
& Unfair & De ceptive Pract.
Case Study

Monday
December 6

Friday
December 3
Review RESPA
& Unfair & De­
ceptive Pract.
Case Study

Fair Credit
Billing
G. Loney

Open End
Credit
G. Loney

Fair Credit
Billing
Case Study

Open End
Credit
Case Study

Fair Credit
Billing
Case Study
Class Review

R«g. Q
A. Raiken

i Fi»ir Credit
Reporting
M. English

Examination
Procedures
(HUD Film)

Examination
Procedures
cont.

Consumer
Leasing
L. Barr
Fair Cr. Rept.
& Leasing
Case Study
Review Examina
tion Checklist
6 Uniform
»
Compl. Report

Wednesday
Decoaher 8

Fair Cr. Rept. Exam. Proc.
& Leasing
(cont.
)
Case Study
enforcement
Class Review Actions
Reg. H
Critique
Flood Ins.
R. Insley

Class
Luncheon
Comments by
Jpnet Hart

H

Open End
Credit
Case Study
Class Review

Tuesday
December 7

including
Uni form
Compliance
Report;
Reporting
Standards;

Future
Prospects;
Presentation of
Certificates
J. Kluckman

FR 858 (R e v .

1 2 -7 1 )

(Name and Address of Bank)

(Date of Examination)

CIVIL RIGHTS QUESTIONNAIRE

Pursuant to Section 805 Title VIII of the Civil Rights Act of 1968, it is
unlawful for a bank in connection with loans or other financial assistance, because
of the race, color, religion or national origin of (1) loan applicant, (2) any person
associated with the loan applicant, (3) any present or prospective owner of the dwelling,
(4) any lessees (5) any tenants or occupants, to deny a loan or other financial assistance
for the purpose of purchasing, constructing, improving, repairing, or maintaining a
dwelling. Further, it is unlawful in connection with any of the loans mentioned to
discriminate in the fixing of (a) amount, (b) interest rates, (c) duration, or (d) other
terms.
In an effort to determine the bank’s knowledge and compliance with this law,
the examiner is requested to complete the following questions from information obtained
from personal observations and investigations as well as information supplied by bank
management.
(Circle appropriate answer where indicated; otherwise supply data requested.)

1«

Does the bank make loans for residential purposes, including:
Yes
Yes
Yes

No
No
No

Are the bank*s loan officers and executive management aware
of the provisions of Title VIII of the Civil Rights Act of 1968?

Yes

No

Is a notice posted in a conspicuous place in the bank notifying
the public of the provisions of the above mentioned law?

Yes

No

Does the bank include a statement as to its nondiscriminatory
practices in all advertising of real estate loans?

Yes

No

a.
b.
c.
2,

3.

4«

Purchase
Construction
Improvement, repair, and maintenance

5.

What is the estimated population of the bank*s primary service
area?

6.

What is the estimated minority groupie population of the bank's
primary service area?

7.

What is the estimated number of residential real estate loans
made by the bank during the past calendar year?

8.

What is the estimated number of residential real estate loans
made to minority* group borrowers during the past calendar year?

9.

What is the estimated number of residential real estate loan
applications received during the past calendar year?

10.

What is the estimated number of residential real estate loan
applications received from minority group members during the
past calendar year?

•J For the purpose of this form, minority group is defined as Negro/Black, American
Indian, Spanish American, Oriental or Other Minorities (such as Eskimos). Members
of the white race are considered non-minority.




FR 858 (Rev. 12-71)

-211«

12.

13.

14.

15.




Are there neighborhoods or other areas of high concentrations of
minority group members in which the bank refuses to make real
estate loans? If so, specify area and reasons for such refusal.

No

Does the bank refuse to make loans to members of minority groups
seeking to purchase residential property in areas where there
are no or few minority group residents? If so, specify area and
reasons for such refusal.

Yes

Yes

Are there any residential areas with no or few minority group
members within the bank's primary service area where the bank
has no, or relatively few, residential real estate loans? If
so, specify areas and reasons for such.

Are loan terms, i.e., amount, interest rate, duration etc., set
without regard to borrower's race, color, religion or national
origin?

Yes

No

Yes

Are there any residential areas with high concentrations of
minority group members within the bank's primary service area
where the bank has no or relatively few residential real estate
loans? If so, specify areas and reasons for Buch.

No

No

No

CONSUMER

ADVI SORY

COUNCIL

Board o f Governors
Federal Reserve System
CHAIRM
AN
Leonor K. Sullivan
U.S. House o f Representatives
Mrs. Sullivan has been in Congress fo r 24 years, beginning in
1952. She was the f i r s t woman e lected to Congress from Missouri. For 12
years, from 1963 to 1975, Mrs. Sullivan was Chairman o f the Subcommittee
on Consumer A f f a ir s o f the House Banking and Currency Committee. She was
one o f the primary authors o f the Consumer Credit P rotection Act o f 1968,
which included the Truth in Lending A ct. In 1970 Mrs. Sullivan sponsored
the Fair Credit Reporting Act in the House. She was a member o f the
National Commission on Consumer Finance from 1969 to 1972. In 19?4
Mrs. Sullivan proposed l e g i s l a t i o n to forb id d iscrim in ation in the exten­
sion o f c re d it on the basis o f sex, marital sta tu s, race, c o lo r , r e lig io n
and age. These proposals are now embodied in the Equal Credit Opportun­
it y Act. Mrs. Sullivan sponsored the Food Stamp Act in 1964. Mrs. S u l l i ­
van is currently Chairman o f the House Committee on Merchant Marine and
Fish eries, and ranking m ajority member o f the Committee on Banking,
Currency and Housing and o f that Committee's subcommittees on Housing
and Community Development, and Consumer A f f a i r s .
In a d d ition , she chairs
the Joint Committee o f the Congress on Defense P rotection and i t s House
Materials A v a il a b ili t y Subcommittee.

VICE CHAIRM
AN
William D. Warren
Los Angeles, C a lifo rn ia
Mr. Warren is Dean o f the School o f Law o f the University o f
C aliforn ia at Los Angeles. He was reporter--draftsman o f the Uniform
Consumer Credit Code, 1964 to 1974, and has been a consultant on consumer
law and d e b t o r /c r e d it o r law to the National Commission on Consumer Finance
and various C alifornia agencies. Mr. Warren is the author o f books and
a r t i c l e s concerning commercial and consumer law. He taught law at Stanford
University and the University o f I l l i n o i s before jo in in g UCLA.




-2 -

M BERS
EM
Barbara D. Blum
Atlanta, Georgia
Ms. Blum is Vice Chairman o f the Fulton County Planning Commission
and was u n til re cen tly a member o f the Atlanta Regional Commission Health
and S o cia l Services Advisory Board. She has broad experience as chairman
or member o f numerous state-w ide consumer oriented org a n iza tion s. Ms. Blum
has a lso worked in the f i e l d o f mental health. She has a degree o f Master
o f S o cia l Work from Florida State U niversity.

Roland E. Brandel
San Francisco, C a lifo rn ia
Mr. Brandel is a partner in the law firm o f Morrison and
Foerster. He is a member o f the Committee o f the American Bar A sso cia tion
on the Regulation o f Consumer Credit. He has worked e x te n siv e ly in the
f i e l d o f bank c r e d it card law. He has been v i s i t i n g p ro fe sso r o f law at
the University o f C a lifo rn ia at Berkeley. Mr. Brandel has w ritten and
lectured on the subjects o f Truth in Lending, Fair Credit B i l l i n g , Equal
Credit Opportunity and e le c t r o n ic funds tra n sfe r.
Agnes H. Bryant
D e tr o it, Michigan
Mrs. Bryant is D irector o f the City o f D etroit Human Rights Department.
She chairs the Michigan Consumer Council, and is v ic e president o f the Consumer
Research Advisory C ouncil, a member o f the Board o f the National A sso cia tio n
fo r the Advancement o f Colored People, a member o f the Advisory Council o f
the Wayne County Consumer Protection Agency, and a former member o f the Michigan
State Advisory Council on Vocational Education.

John G. Bull
Pompano Beach, Florida
Mr. Bull is President and Chief Executive O f f i c e r o f the Southern
BankCard Corporation. He has served two terms as chairman o f the bank
card d iv is io n o f the Florida Bankers A sso cia tio n , and was chairman o f the
design s p e c if ic a t io n s committee which developed a computer program for
d e s c r ip t iv e b i l l i n g in e le c t r o n ic funds transfer. He has done extensive
work on other aspects o f the operation o f bank card systems.




-3-

Robert V. Bullock
Frankfort, Kentucky
Mr. Bullock is Assistant Attorney General in charge o f the
Division o f Consumer P rotection in the O ffic e o f the Attorney General
o f Kentucky. H is a ctiv e in the National A ssocia tion o f Attorneys
e
General’ s Consumer P rotection Committee. H was previously an
e
attorney fo r the Federal Trade Commission at Cleveland, Ohio, and in
Washington, D.C.
Linda M. Cohen
Washington, D.C.
Ms. Cohen is Coordinator o f the National Credit Task Force o f the
National Organization for Women, and has served as spokesperson and le ctu r e r
on women and c r e d it fo r that organization. She has been an attorn ey-adviser
in the General Services Administration since 1973 and is a ctiv e in lo c a l
community organizations.

John R. Coleman
Haverford, Pennsylvania
Mr. Coleman is President o f Haverford College and Chairman o f
the Board o f Directors o f the Federal Reserve Bank o f Philadelphia. He is
a Trustee and member o f the Research and P olicy Committee o f the Committee
fo r Economic Development. Mr. Coleman was a member o f s p e cia l CED commit­
tees which produced in 1976 statements regarding national p o lic y on "Welfare
Report and it s Financing1 and "Fighting I n fla tio n and Promoting Growth." H
1
e
is trustee o f a number of educational in s tit u t io n s and was formerly a trustee
o f the Special Development Fund o f the National A ssocia tion fo r the Advance­
ment o f Colored People. Mr. Coleman is the author o f a number o f books
having to do with economics and labor problems. One o f his books, "Blue
Collar Jounal" (1974) recounts his experiences in 1973 when he took leave
from his p rofession al occupations to work as a blue c o l l a r laborer.
Robert R. Dockson
Los Angeles, C alifornia
Mr. Dockson is President and c h ie f executive o f f i c e r o f the
C aliforn ia Federal Savings and Loan A ssocia tion . P rio r to jo in in g that
A ssocia tion , he was dean o f the undergraudate School o f Business and the
Graduate School o f Business Administration o f the University o f Southern
C alifornia at Los Angeles. Mr. Dockson has received the Human Relations
Award o f the American Jewish Committee and the Brotherhood Award o f the
National Conference o f Christians and Jews.




-4-

Anne G. Draper
Washington, D.C.
Ms. Draper is an economic analyst with the AFL-CIO and author of
numerous articles, testimony and policy resolutions on consumer matters.
She serves on advisory councils in the Department of Labor and the Bureau
of the Census.
She was formerly a social research analyst with the
Social Security Administration and served as an economist with the National
Wa r Labor Board and the Office of Price Controls.

Carl Felsenfeld
New York City, New York
Mr. Felsenfeld is Vice President of Citicorp in charge of legal
aspects of its consumer-related operations.
He is a member of the Committee
on the Regulation of Consumer Credit of the American Bar Association and the
Committee on Consumer Affairs of the New York City Bar Association and is an
adjunct professor of Banking Law at Fordham University.
He has served as
consultant to the Commissioners on Uniform State Laws in the draftine of
the Uniform Consumer Credit Coda

Marcia A. Hakala
Omaha, Nebraska
Ms. Hakala was until recently Executive Director of the Mayor's
Commission on the Status of Women for the city of Omaha and is a member
of a number of other advisory councils and committees working in the
fields of manpower planning, women in small business, and problems of
older citizens.
She has taught at Illinois State University, Cleveland
State University, Stout State University, and Indiana University.

Joseph F. Holt, III
Washington, D.C.
Mr. Holt is a consultant to the Federal National Mortgage
Association, where he was formerly National Field Representative with
responsibility for field operations, especially in the area of discrimi­
nation by geographic areas (nred-liningM ). Mr. Holt is a former member
of the U.S. House of Representatives, and was a member of the
Education and Labor Committee and served on House subcommittees respon­
sible for minimum wage legislation and Federal aid for education in
impacted areas.




-5 -

Edna De Coursey Johnson
Baltimore, Maryland
Ms. Johnson is D irector o f Consumer Services o f the Baltimore Urban
League. She is a member o f the P residen t's Consumer Advisory Council.
Ms. Johnson is a ls o a member o f the Maryland and V irg in ia C itizen s Consumer
Councils, o f
Governor's Commission on the Status o f Women, and o f the
Board o f D irectors o f Consumer*s Union o f the United States. She was formerly
a teacher in the Baltimore public sch ools.
Robert J. Klein
New York C ity, New York
Mr. Klein is a senior e d ito r o f Money Magazine. He i s a member o f
the National Advisory Council on Small Claims o f the National Center fo r
State Courts and served from i t s inception on the Federal Reserve Board's
Truth in Lending Advisory Committee (which the Consumer Advisory Council
rep la ces). lie has been a reporter and e d ito r with n number o f publications
and ic the author o f numerous a r t ic le s concerning consumer a f f a i r s . Mr. Klein
has t e s t i f i e d on consumer mattc-rs he Tore governmental committees.

Ralph Lazarus
Cincinnati, Ohio
Mr. Lazarus is Chairman o f the Board o f D irectors o f Federated
Department S tores, Inc. He is a Trustee and member o f the Research and
Policy Committee o f the Committee fo r Economic Development and has been
associated with the Stanford Research In s titu te Council and the Council fo r
Financial Aid to Education. Mr. Lazarus is a Trustee o f Dartmouth College
and a member o f the Rockefeller University Council, among a number o f other
c i v i c a s s o c ia tio n s .

Percy W Loy
.
Portland, Oregon
Mr. Loy is president o f the Kubla Khan Food Company. H is serving
e
his third term as a member o f the D is t r ic t Advisory Council o f the Small
Business Administration, is a member o f the Business Liaison Committee o f
the Business School o f the University o f Oregon, and is a past president
o f the Frozen Food Council o f Oregon and a past member o f the Marketing
Advisory Council o f the Business School o f the University o f Oregon. H is
e
a member o f the Board o f Overseers o f Lewis and Clark C ollege.




-6-

R. C. Morgan
El Paso, Texas
Mr. Morgan is president of the Government Employees Credit Union
of El Paso.
He is immediate past vice chairman of the National Legislative
Forum and chairman of the Governmental Affairs Committee of the Credit Union
National Association,
He served three terms as president of that Associa­
tion.
He has served as a member and as chairman of the Credit Union Advisory
Commission for the State of Texas and as a member of the Texas Credit Union
CciHiniLSsion* He has tcctxfzLci cn consumer protection i s s u e s before couuui.t.teeo
of the U*S. Senate rr.d House o f Representatives and regulatory agencies.

Reece A. Overcash
Dallas, Texas
Mr. Overcash is president and chief operating officer of Associates
Corporation of North America.
He has served as president of the National
Consumer Finance Association and formerly served on the board of directors
of the North Carolina Economic Resources Association.
He has taught at the
National Institute of Consumer Finance at Marquette University and the
National Instalment Banking School at the University of Colorado.

Raymond J. Saulnier
New York City, New York
Mr. Saulnier is professor emeritus of economics at Barnard College,
Columbia University.
He is a former chairman of the President's Council of
Economic Advisers and a former director of the Financial Research Program of
the National Bureau of Economic Research, where he was responsible for studies
of consumer instalment
credit.
He has written extensively in the field of
consumer instalment credit.

E. G. Schuhart
Dalh ar t, Texas
Mr. Schuhart, a farmer and rancher, has served as vice-chairman and
member of the Federal Farm Credit Board (policy-making board for the Farm
Credit System).
He has also been a member of the Agricultural Stabiliza­
tion and Conservation Committee for the State of Texas and mayor of the City
of Dalhart, Texas.
He has been a director of the Farm Credit Board of
Houston and a chairman and member of the stockholders1 committee of the
Federal Land Bank of Houston.
He was formerly manager of the Schuhart Grain
Company.




-7James E. Sutton
Dallas, Texas
Mr. Sutton is Secretary and Corporate Counsel of Chilton Corporation.
Before joining Chilton in 1973, Mr. Sutton served three years as staff
attorney and consumer education consultant in the Texas State Consumer Credit
Commission.
While in that office, he was charged with enforcing the Texas
Credit Code and worked closely with the Federal Truth in Lending Act.
Mr. Sutton was also engaged in consumer education programs and participated
in the establishment of the Consumer Credit Counseling Service of Greater
Dallas and Family Debt Counselors of Corpus Christi.

Anne Gary Taylor
Alexandria, Virginia
Ms. Taylor is a former national president of the American Association
of University Women.
For 21 years she was president of Sweet Briar College.
She has served on the American Council on Education, and was vice-chairman
of the Board, and a member of the Commission on Students and Faculty of the
Association of American Colleges.
She was one of four educational administra­
tors who arranged for the establishment of the United States-India Women's
Colleges Faculty Exchange Program.

Richard D. Wagner
S imsbury, Connecticut
Mr. Wagner is president of Wagner Ford Sales, Incorporated.
He is a
member of the board of directors of the National Automobile Dealers1 Associa­
tion and is chairman of the Association's Public and Consumer Affairs Com­
mittee and director of the Association for the State of Connecticut.
He
established the Connecticut Automotive Consumer Action Panel Program (AUTOCAP)%

Richard L. Wheatley, Jr.
Stillwater, Oklahoma
Mr. Wheatley is chairman and chief executive officer of the University
Bank at Stillwater.
He was the first Administrator of Consumer Affairs for the
State of Oklahoma after the State enacted the Uniform Consumer Credit Code,
and served as a representative in the State legislature.
He has served as
consultant with some 30 other State legislatures regarding enactment of the
Uniform Consumer Credit Code in those states.