The Home Mortgage Disclosure Act has been so successful at drawing attention to lending discrimination that many consumer advocates are crying out for more.
Activist groups want Congress to bring nonbank financial companies under HMDA-like disclosure rules and force lenders now supplying mortgage-lending data to do the same for other types of loans.
HMDA-style data on a broader array of activities might reveal similar discrimination and put even more pressure on banks to revamp their policies.
But while advocates insist that the benefits of such disclosure would far outweigh the costs, bankers can't tolerate the thought.
Groaning Under Paperwork
"Some of our bankers would just jump out the window if they had to collect more data," said Vickie B. Tassan, corporate CRA official for MNC Financial Inc. in Baltimore.
The next battleground for public disclosure is likely to be small-business lending. Public advocates have asked both Congress and the new administration to require detailed data collection and disclosure by banks on the small-business loans they make.
These calls have been made before. But previously mandated reporting requirements don't go far enough, activists say. And they are hopeful that the spotlight on mortgage discrimination has made lawmakers more receptive.
Clinton Aides Show Interest
At least some policymakers appear to be listening. President Clinton's top banking aides have begun making noises about the issue, signaling to some that they are likely to take it up in the near future.
On Capitol Hill. Rep. Albert Wynn, D-Md., and Rep. Maxine Waters, D-Calif., this year introduced bills that would require such disclosure.
"I give the passage of some small-business disclosure law a 50-50 chance this year," said Deepak Bhargava of the community group Acorn. "This is the year to do it."
While little information exists on differences in lending to minority-owned and white-owned small businesses, anecdotal evidence suggests that discrimination could be a significant problem.
Bias Found in Building Loan
In a study of construction lending, Timothy Bates of the New School for Social Research found that black-owned construction companies are denied bank loans more frequently than white-owned firms with similar characteristics. And the loans minority contractors do get, he found, are generally smaller. "There's been very little angst within the banking community about small-business lending," Mr. Bhargava said. "That contrast tells you something about how powerful HMDA has been."
The Federal Deposit Insurance Corp. Improvement Act of 1991 authorized regulators to require banks to report on their small-business lending. But the rules passed by the banking agencies do not contain enough information to get a handle on discrimination in that area, critics say.
Beginning with June 30 call reports, banks will be required to provide data only about the size of the business loans they make, not the ownership or location of borrowers.
"The current small-business data are going to be of almost no use to any of us," Mr. Bhargava said.
Some members of Congress have already asked the Clinton administration to revisit these rules and force regulators to bring them into line with Congress' intent.
In a Dec. 8 letter to President-elect Clinton, Rep. Richard E. Neal, D-Mass., wrote, "Enhanced data on small-business lending is not only in the public interest, it will also assist banks in becoming more efficient and will provide new marketing opportunities."
Regulators Ignore Pleas
Sen. Donald Riegle of Michigan, chairman of the Senate Banking Committee, has forcefully asked the regulators to revamp the small-business disclosure rules, but so far to no avail.
Facing the possibility of another HMDA-like law, bankers question the rationale of requiring disclosure to "prove" discrimination in every area of lending. The industry has learned the important lessons about loan bias, they say, and has been sensitized to the problem in the broadest sense.
And collecting detailed information about commercial loans would present real problems, the bankers say. Because these loans tend to be less homogeneous than mortgages, categorizing them could be difficult. Even the most basic question - defining a small-business loan - is not a simple one.
"Small-business lending disclosure would be a record keeping and disclosure nightmare," said Lucy H. Griffin, a Washington-based compliance cansultant.
Despite these concerns, some industry leaders appear to have grown more receptive to added disclosure. Speaking to a group of community activists in April, William Brandon, chairman of the American Bankers Association, said he personally would be willing to disclose small-business loan data in exchange for reduced paperwork in other areas.
Small business is not the only area on which industry watchdogs are seeking more information.
"There is discriminatory treatment in the entire mortgage delivery finance system," said Chris Lewis of the Consumer Federation of America. "Part of the problem is with the loan officers, part of the problem is with the underwriters, part of the problem is with the appraisers."
Financial players outside the mortgage industry could also face disclosure laws modeled after HMDA. For example, Rep. Joseph P. Kennedy 2d, D-Mass., recently introduced legislation aimed at the largest members of the insurance industry.
Bankers seeking the proverbial "level playing field" cheer such proposals. While many would prefer no disclosure laws at all, they say that if they should bear the costs of collecting and reporting the data, so too should competitors.
"There's a contagious sense of responsibility," Mr. Lewis said. "And the footlights are on."