[StBernard] GAO Issues Critical Report of Federal Regulators Enforcement of Fair Lending Laws

Westley Annis Westley at da-parish.com
Wed Aug 12 16:17:56 EDT 2009


If one government agency can't do the job, let's create a second one to make
the first one's job even harder.

-----Original Message-----

August 12, 2009



GAO Issues Critical Report of Federal Regulators Enforcement of Fair Lending
Laws

Committee members say report is one of the reasons the new Consumer
Financial Protection Agency should be created



Washington, DC - House Financial Services Committee members
Reps. Al Green (D-TX), Maxine Waters (D-CA), Luis V. Gutierrez (D-IL), and
the committee's chairman Barney Frank (D-MA) today released a Government
Accountability Office (GAO) report
<file:///C:\Documents%20and%20Settings\kschwarzbach\Desktop\GAO.pdf> which
is critical of federal regulators' ability to effectively and efficiently
enforce the nation's fair lending laws. In the report, GAO found that
"[f]ederal enforcement agencies and depository institution regulators face
challenges in consistently, efficiently, and effectively overseeing and
enforcing fair lending laws due in part to data limitations and the
fragmented U.S. financial regulatory structure." To view the full report,
click here
<file:///C:\Documents%20and%20Settings\kschwarzbach\Desktop\GAO.pdf> .



"The information in this report is just one of many examples of the need for
improved protection for all consumers of financial products. Inadequate
enforcement of consumer protection laws hurts all consumers, regardless of
color, creed, sex or economic status," said Congressman Green. "It is time
to work together and create a consumer financial protection agency that will
finally give adequate attention to safeguarding consumers from abusive
products."



Congresswoman Waters said, "As the Chairwoman of the Subcommittee on Housing
and Community Opportunity, I am concerned about the role that mortgage
lenders played in steering homeowners into predatory loans. The GAO report
issued today reveals many shortcomings in the current U.S. financial
regulatory structure, including the failure of the Home Mortgage Disclosure
Act to require certain lenders to collect and report data on the credit
risks of borrowers, information most helpful in identifying lenders most
likely to engage in discriminatory practices. This report highlights the
need for the proposed Consumer Financial Protection Agency, which would
close these regulatory gaps and protect consumers from predatory loans."



"The results of the GAO's study on fair lending unfortunately come as no
surprise to me," said Congressman Gutierrez, Chair of the Subcommittee on
Financial Institutions and Consumer Credit. "The weaknesses of our current
system in identifying and ending discriminatory lending practices is
something that my constituents and Americans across the country have lived
with for too long. Recent consumer studies have indicated what we have known
to be true at the community level - African American and Latino borrowers
are significantly more likely to receive a subprime loan or to be targeted
by predatory lenders. This GAO report is yet another contribution to the
mountain of evidence indicating that Congress needs to act immediately to
create an independent consumer protection agency with the focus and the
authority to enforce our fair lending laws."



The report will be constructive to the committee and Congress as it
considers legislation to revamp and update the nation's financial regulatory
system. In fact, the committee is already considering a number of GAO's
recommendations to enhance the data available to detect potential fair
lending violations as part of HR 3126, a bill to create a new federal
Consumer Financial Protection Agency, including amending the Equal Credit
Opportunity Act to require collection of race and ethnicity information and
some loan data for small business loans. The report was requested by
Chairman Frank along with 15 other Democratic Financial Services Committee
members who asked GAO in April 2008 to review the effectiveness of federal
oversight of the country's fair lending laws.



Key findings of the GAO report:



1. Data available to detect potential fair lending violations have
limitations, which may affect federal efforts to enforce fair lending laws.



2. Although depository institution regulators' fair lending initial
activities to assess evidence of potential fair lending violations generally
have been more comprehensive than those of the enforcement agencies, the
differences in the various oversight programs raise questions about the
consistency and effectiveness of their efforts and highlight challenges
associated with a fragmented regulatory system.



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