In Brief: OCC - Make Sure Your Bank Isn't a Predator

WASHINGTON - Julie L. Williams, chief counsel for the Office of the Comptroller of the Currency, challenged banking industry officials Monday to take self-regulatory steps against predatory lending to deter Congress or the states from passing overly restrictive laws.

Speaking in Chicago at a risk management conference co-sponsored by Robert Morris Associates and the Consumer Bankers Association in Chicago, Ms. Williams warned bankers to heed the lesson of the privacy debate of the past year and take extra steps to ensure their lending practices are beyond reproach.

"Like privacy, there is a lot of emotional momentum on the predatory lending issue," she said. "And, just as it was impossible to be against privacy, it is equally impossible not to be against predatory lending."

Though banks are well supervised and most are responsible lenders, she said, some legislative proposals would ban prepayment penalties and balloon payments on all mortgages, not just high-priced ones. Other lawmakers, she added, have threatened interest rate caps.

To fend off any overreaction, Ms. Williams said, banking organizations should review the practices of all their lending units, pay special attention to risk management procedures and controls in subprime lending operations, re-evaluate relationships with loan brokers and other third parties, and take visible actions such as partnering with community groups to teach financial literacy and find new customers.


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