During a recent speaking engagement, a bank president asked me why his institution should consider self-testing for fair lending. The president said he knew the bank did not discriminate, and that he didn't believe in managing his bank to satisfy every regulator's whim. My response to this president was simple: Self-testing is unnecessary if you know your bank is in full compliance. But how do you know?

You know that your institution has a variety of loan products designed to penetrate your entire community, but how do you know if your officers are offering the products to qualified applicants? You changed your underwriting standards to accept as credit histories such nontraditional items as utility payments, but how do you know if your lenders are requesting the bills? Your entire loan staff completed diversity training, but do you know if the lender in your branch office really understood it?

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