WASHINGTON - The Office of the Comptroller of the Currency on Thursday released rules meant to encourage banks to make fair-lending self- assessments.
The office said in an interim guideline that it will not require a bank to disclose self-assessment results unless they are used in defense against charges of lending bias.
The agency also said it will not take enforcement actions against a bank that discovers a lending bias problem through a self-assessment and then takes steps to correct it. But the Comptroller's office said federal law still requires it to refer the case to the Justice Department.
The office also gave banks an incentive to release self-testing results. Banks that do so will get a streamlined fair-lending exam, said Bert Otto, assistant deputy comptroller for compliance management. Rather than conduct a loan file review, examiners will simply check the validity of a bank's self-assessment, he said.
Fair-lending self-assessments can include mystery shopper programs or internal loan reviews.
"Overall this is a major plus," said Paul H. Schieber, a partner at Blank, Rome, Comisky & McCauley in Philadelphia. "They have finally felt the pressure and reduced to writing what they have been telling the banks. That is helpful."
"I think the OCC has granted as much privilege as they believe they legally can to encourage banks to undertake self-assessments and self- corrections," said Paul Alan Smith, senior federal counsel at the American Bankers Association. "It is a positive."
But Mr. Schieber warned the policy does not provide "lock-solid protection." The government will seek these test results if a fair-lending complaint goes to court, he said.
Bankers asked the Justice Department and the banking agencies last fall to clarify whether they would seek the results of bank self-tests. The Justice Department said in a statement last winter that it would not base a case on a bank's self-assessment, but would use the results during litigation. The banking agencies expressed similar sentiments.