Warning of higher compliance costs, industry officials are opposing a Federal Reserve Board effort to rewrite the fair-lending rules.
The Fed on Friday released advanced notices of proposed rulemakings for regulations B and C, which respectively implement the Equal Credit Opportunity Act and the Home Mortgage Disclosure Act. Neither notice proposed detailed changes; rather each raised issues the Fed wishes to address in the rewrite.
Under consideration are:
Allow voluntary collection of race and gender data on all borrowers. Currently, the rule only permits collection of this data on mortgage loans.
Require Reg B disclosures any time consumers use a lender's Internet site to determine if they prequalify for a loan.
Force originators to police the fair-lending activities of independent brokers.
Institute Home Mortgage Disclosure Act data collection for borrowers who are pre-approved for loans.
Mandate lenders flag mobile home loans and include residential construction loans in their HMDA reports.
Industry officials wasted no time attacking the Fed's initiative, even though the central bank did not indicate whether it supported any of these ideas.
"It is ironic that as part of a streamlining review we have items that would actually increase the burden of compliance," said Karen Thomas, director of regulatory affairs at the Independent Bankers Association of America.
Paul A. Smith, federal counsel at the American Bankers Association, blasted the notion of letting banks collect race and gender data on all borrowers. The Fed rejected a similar proposal in 1996.
Mr. Smith said the expensive data collection would quickly become mandatory and require extensive modifications to computer systems. "At this time, a great deal of computer resources are going into year-2000," he said. "Now is not the time to add more programming burden to the system."
But Comptroller of the Currency Eugene A. Ludwig supported the idea, saying in a prepared statement that "if banks aren't allowed to collect race and gender data on loan applicants, how can managers know whether their lending officers are fulfilling their responsibilities to give all Americans equal access to credit?"
Jo Ann S. Barefoot, a partner at the consulting firm KPMG Barefoot Marrinan, said the Fed is unlikely to permit the new data collection. She added that some of the proposed changes could help banks. Of particular benefit, she said, would be changes that clarify the difference between an application and a request for information.
"They have really bitten into some very meaty issues here," Ms. Barefoot said. "They are all good questions with no obvious answers."
Steve Zeisel, senior counsel at the Consumer Bankers Association, urged the industry not to overreact. "The Fed is doing what it ought to be doing," he said. "It is exploring lots of avenues for thought. This is not a final proposal."
Comments are due May 29. A more detailed follow-up proposal is expected from the Fed this fall.