WASHINGTON -- Bankers could face an explosion of litigation as a host of civil rights groups prepare to use the Fair Housing Act to force banks to lend to low-income and minority borrowers.

Two of the country's most active civil rights law firms -- the Washington Lawyers Committee for Civil Rights and Urban Affairs and the NAACP Legal Defense and Education Fund -- already have entered the fray.

Banking advocates said these groups, which employ dozens of lawyers and which can call in thousands more as volunteers, pose a serious threat to the industry.

The Justiec Department alone, can only really deal with a relative handful of fair-lending issues," said Warren Traiger, a New York banking attorney. "But, where as these are private actions, that really multiplies the number of potential litigants out there,"

Perhaps the biggest threat comes from the Lawyers Committee, the same group that recently convinced the Denny's restaurant chain to ante $54 million to settle discrimination charges.

"The Lawyers Committee has very capable lawyers and they pose a very significant litigation threat," said Andrew Sandler, a Washington, D.C., attorney who represented Chevy Chase and several other institutions in fair-lending cases.

Coordinating that litigation threat is John P. Relman, the director of the group's fair-housing project. Mr. Relman said he has begun a massive fair-lending probe targeting financial institutions in the Washington-Baltimore area.

"If litigation stems from this project, it may well be as massive as the Denny's case," Mr. Relman said.

The group should finish the initial phase of its work within a month, Mr. Relman said. At that point, the lawyers will review the data and decide which banks, if any, they should sue.

The group has recruited two of the Department of Justice's top fair-lending specialists for the investigation. Former prosecutor Richard Ritter, who left the department earlier this summer, will work with Bernard Sisken, a Philadelphia-based statistician who regularly reviews lending cases for the government.

"Our hope is to essentially develop the same type of investigation and litigation that Justice was doing, only this time in the private sector," Mr. Relman said.

The Legal Defense Fund is pursuing its own case in Alabama against the Gadsden Corp. and First National Bank of Gainesville, said Judith A. Browne, the organization's assistant counsel.

The Defense Fund is trying to show that the two institutions systematically rejected loan applications from African-Americans, she said. Mr. Browne said she anticipates filing similar suits during the coming months.

"I get a lot of calls with mortgage discrimination complaints," Ms. Browne said. "So, I am doing a lot of investigations and trying to find more cases for us to bring,"

Even smaller legal-aid providers plan to move into the fair-lending arena. Arnold Cohen, project director of the Queens Legal Services Corp., said he is investigating several cases to see if they warrant legal action.

"I do think it is time to begin to think about how we can effect changes in the housing stock by looking at lending," Mr. Cohen said. "Certainly one of the priorities would be if someone was denied financing to buy a home,"

Making the situation even more difficult for the industry is the Justice Department's apparent support of these actions.

James L. Cott, the chief of civil rights unit at the U.S. Attorney's Office of the Southern District of New York, said at a conference last week that the department hopes to file friendof-the-court briefs in these cases supporting the plaintiffs.

The industry must react to this shift from government initiated litigation to private suits now, rather than later, said Mr. Sandler, a partner with Skadden, Arps, Slate, Meagher & Flora law firm here.

"It ought to be a specific concern for the industry and these developments ought to be closely monitored to see what the prospects are for private enforcement," Mr. Sandler said.

The only way to challenge this private enforcement is to litigate these cases, Mr. Traiger said.

"Just in the abstract, I would advise banks not to open their files and not to cooperate," Mr. Traiger said.

Every time a bank caves into pressure from one of these groups and settles, it encourages other groups to file similar suits, Mr. Traiger said.

"That is dangerous," he said. "You are going to have litigation coming out of the woodwork,"

And, if history is any guide, this increase in suits will affect the ability of banks to expand, said Tom Vartanian of the Washington, D.C., law firm Fried, Frank, Harris, Shriver & Jacobson.

"I think the history of the last cycle in the 1970s when we went through heightened sensitivity in fair-lending showed ... it could slow down a transaction or merger that institution was involved in," Mr. Vartanian said.

The only way to counter these groups is to ensure that your institution's fair-lending record passes muster, Mr. Sandler said.

"It reinforces the need for banks to make sure they are comfortable with their fair-lending compliance," he said. Mr. Traiger agrees, saying the industry is now on notice.

"The time to deal with this is not when you are under spotlight," Mr. Traiger said. "The time to deal with it is now."

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