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For release on Delivery 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.
