The Clinton administration plans to ask Congress to significantly increase spending on enforcement of the fair-housing laws.
As part of his 1999 budget request, due to Capitol Hill early next month, the President will ask for a 10% increase in funding for the Justice Department's civil rights division and a 70% increase for the Department of Housing and Urban Development's fair-housing unit.
Most of the $28.6 million in new funds would be used to investigate apartment owners and real estate agents accused of refusing to offer properties to minorities. But banking lawyers expect at least some funds will be spent to bolster lending bias investigations.
"This reaffirms the administration's commitment to fair-housing enforcement," said Andrew L. Sandler, a partner in the Washington office of Skadden, Arps, Slate, Meagher & Flom. "The expectation is that the level of enforcement activity will likely remain high between now and the end of the Clinton administration."
Warren Traiger, a partner at the New York law firm of Butler, Fitzgerald & Potter, said he expects HUD to use some of the funds to investigate mortgage companies. "This seems to be an area HUD and the government are going to take a closer look at it," Mr. Traiger said.
Laurence E. Platt, a partner at the Washington law firm of Kirkpatick & Lockhart, said he expects HUD to conduct matched-pair testing to see if lenders are discriminating. This technique involves sending a black and a white borrower with similar backgrounds to a lender to see if they are treated similarly.
Banking lawyers also were fretting this week over comments to the weekly newspaper Legal Times by Tom Perez, the newly appointed deputy assistant attorney general for civil rights. Mr. Perez listed mortgage lending discrimination as one of five issues that comprise the "heart and soul of the division."
The proposed spending increases were outlined in a series of Martin Luther King Jr. Day speeches by top administration officials, including Vice President Al Gore.
"Through new reforms and heightened commitment to enforcement, we will seek to prevent discrimination before it occurs and punish those who do discriminate," Vice President Gore said at the Ebenezer Baptist Church in Atlanta.
Bill Lann Lee, the acting assistant secretary for civil rights, said the Clinton administration has asked the Justice Department to coordinate all bias enforcement programs.
"Enhanced coordination will lead to more consistent enforcement of civil rights laws, broader dissemination of best practices, and improved data collection," Mr. Lee said Monday to the Detroit-based group Focus: Hope.
Industry officials said banks should not overreact. "Don't hit the panic button," said Joe Belew, president of the Consumer Bankers Association. "Banks have more credibility than ever before. This is just a continued commitment by the administration to underserved communities."