through the use of uniform disclosures, to enable consumers to
make informed decisions when shopping for and using deposit
accounts. The TCPA applied to telemarketing, and like the FDCPA it limited calls to people during certain times and required
that information be given to the person being called. The TCPA
also required solicitors to maintain a “do not call” list, honoring
a person’s request that he or she not be called.
During this period the Department of Justice (DOJ) focused
significantly on nondiscrimination in lending. The department
had implemented a fair lending initiative and between 1992 and
1997, filed 11 fair lending suits. Some of the suits were based on
referrals from bank regulators; others were the result of DOJ
investigations. The cases alleged marketing, underwriting, and
pricing discrimination. The marketing discrimination cases involved Blackpipe State Bank, Chevy Chase Federal Savings Bank,
and Albank, FSB. In these three cases, DOJ noted the geographic
limitations in each institution’s polices or practices. In the underwriting discrimination cases—Decatur Federal Savings & Loan
Association, The Northern Trust Company, the First National Bank
of Dona Ana County, and Shawmut Mortgage Company—the DOJ
alleged that bank employees were providing assistance to white
applicants that they were not providing to African-American or
Hispanic applicants. This assistance took the form of explaining
negative information on their credit reports and helping document all of their income. With respect to some of the pricing
discrimination cases—Huntington Mortgage Company, Fleet
Mortgage Corp., Long Beach Mortgage Company, First National
Bank of Vicksburg, Security State Bank of Pecos, and First National
Bank of Gordon—the practice of charging overages was the primary concern; in other cases, higher interest rates were at issue.
It was also during this period that the bank regulatory agencies, working together, issued revised fair lending examination
procedures. These procedures called out the three different types
of lending discrimination (disparate treatment, disparate impact,
and overt discrimination) and provided instructions to examiners
on how to detect the various types of discrimination. During this
period the regulators also issued a revised fair lending enforcement policy. In addition, the “Boston Fed Study,” a working paper
prepared by staff from the Federal Reserve Bank of Boston, was
published. Based on HMDA data, the study concluded that there
was a small but real disparity between the loan rejection rates for
whites versus minorities.
In assessing this decade, although new consumer protection
laws were passed, it is clear that enforcement was the primary
activity and that the focus was on nondiscrimination in lending.
DeCADe 4: 1998–2007
The most recent decade was very active, legislatively speaking.
Congress passed the Homeowners Equity Protection Act (
HOEPA), Controlling the Assault of Non-Solicited Pornography
and Marketing Act (CAN-SPAM), the Gramm-Leach-Bliley
Act (GLBA), and the Fair and Accurate Credit Transactions Act
(FACT Act). These laws offered more consumer protections.
HOEPA required lenders to provide additional disclosures for
certain high-cost loans, and CAN-SPAM prohibited certain
e-mail practices. The GLBA protected the privacy of customer
information by prohibiting financial institutions from disclosing
nonpublic personal information about consumers and requiring
institutions to provide notice of their privacy policies and practices
to their customers. The FACT Act sought to improve the accuracy
of data in consumer reporting by requiring many new consumer
disclosures as well as steps to address identity theft. Importantly,
the FACT Act provided free annual consumer report rights for
consumers and improved access to consumer report information.
During this period, the banking agencies made numerous
referrals (239) to DOJ, which continued to file lawsuits and issue
consent orders alleging discrimination in lending. Several banks
were accused of redlining (First American Bank, Centier Bank, and
Old Kent Bank); one of discrimination in underwriting (Deposit
Guaranty National Bank and Associates National Bank); and
another of discrimination in pricing (Compass Bank). Several of
these cases are particularly noteworthy. First, the redlining cases
against Old Kent and First American alleged discrimination in
lending other than residential real estate in addition to residential real estate lending (small business lending in the case of Old
Kent, consumer and small business lending in the case of First
American). Second, the underwriting cases alleged discrimination
in home improvement and credit card lending (Deposit Guaranty National Bank and Associates National Bank, respectively).
Third, the Compass Bank case involved auto lending and alleged
discrimination on the basis of marital status.
During this decade, bank regulators issued a series of consent
orders calling out practices considered unfair or deceptive. The
banks accused of wrongdoing included Providian (2000), Direct
Merchants Bank and First National Bank of Marin (2001), and
First National Bank of Brookings (2003). Each of these cases
involved aspects of credit card marketing or lending or both.
This fourth decade was filled with enforcement actions, notably
those alleging discrimination and those alleging unfair or deceptive practices. Also, the cases and orders in this decade reflect the
government’s concern about small business, auto, and credit card
lending, making it clear that “consumer” protection applied to all
types of lending and the various lending functions.
the CurreNt DeCADe: 2008–2017
Although we are in the early part of the fifth compliance decade,
it promises to be a significant one. Indeed, the laws passed in the
first three years of this decade—the Credit Card Accountability, Responsibility and Disclosure Act (Credit CARD Act) and
the Dodd-Frank Wall Street Reform and Consumer Protection
Act—and the overdraft regulation issued by the Federal Reserve
Board signaled a significant change in the way we think about
consumer compliance. The Credit CARD Act limited interest
rate increases, required additional disclosures, and prohibited a
variety of billing and payment practices that were commonplace
in the industry. The Fed issued regulations regarding the payment
of certain overdrafts and the fees associated with overdrafts. The
Credit CARD Act and the overdraft rules have had widespread
impact, affecting many consumers.
The September/October 2010 issue of this magazine included
an excellent article on page 8 about the Dodd-Frank Act, enacted
on July 10, 2010.