Has the DOJ
By BonIta g. Jones
Q:Haven’t examiners been doing a fair lending review at each exam?
A:Yes. Most of the time fair lending is a standard component of examinations due to the
substantive impact of noncompliance on
consumers and institutions.
✔ Status quo, right?
tone froM the top
For the purposes of this article, the tone from the top will be measured largely by the enforcement agenda at the DOJ. Of course, the
federal banking regulators also have a role in setting the tone, so we
will also look at indicators emanating from their activities. Finally,
we will see what consumers are saying that influences this tone.
Q:When examiners find fair lending violations, don’t they already refer them to the
Department of Justice (DOJ) for further
investigation and enforcement action?
A:Yes. Since the Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA) was passed, the
federal banking agencies are required to refer a pattern or
practice of fair lending violations to the DOJ.
✔Another status quo, right?
Q:Don’t fair lending violations already contribute to poor compliance ratings
and downgraded CRA ratings?
A:Yes. Provisions in the banking agencies’ rating criteria for compliance and CRA examination indicate that fair
lending violations can adversely affect ratings.
So what’s changed or been “renewed”? The “tone from the top”
typically provides a good indication of whether a culture is shifting.
Let’s look at some developments in the fair lending enforcement
world and see what they tell us. If it has changed, let’s see what
risk control practices can help minimize fair lending exposure.
The DOJ has responded to the casualties of the current financial
crisis by making fair lending a top priority in its Civil Rights Division. In my view, the DOJ is taking a “three-pronged” approach to
implementing this priority by ( 1) promoting a “renewed” agenda
for enforcement of fair lending laws, ( 2) dedicating more resources
and specialized staff to its agenda, and ( 3) stepping
up investigation and enforcement of fair lending
cases. The following is a summary of the
#1: Promoting its “renewed” agenda for
enforcement of fair lending laws:
Assistant Attorney General Thomas Perez has
indicated that the DOJ had to restore trust
and interaction with advocacy groups
because there was a perception that the
department was de facto closed for business in
many areas. 1 The DOJ took the following measures to
restore the public’s trust:
■ ■ Creating a fair lending unit in the Civil Rights Division’s hous-