WASHINGTON - The Justice Department expects to begin training bank examiners shortly on fair-lending compliance, Assistant Attorney General Deval Patrick said Monday.
Mr. Patrick, who said the training should begin "soon," added that Justice is working on several question-and-answer sheets to help line-level examiners in the interim.
Justice is offering to provide training to resolve recurring complaints from bankers, who say regulators and Justice subject institutions to different standards, he said.
"I hear this over and over and over again," Mr. Patrick told attendees at an American Bar Association fair-lending conference here. The training will ensure that all the government agencies are on the same page, he said.
Mr. Patrick also said once the regulators adopt similar approaches to fair-lending enforcement, Justice will limit its own reviews either to nonregulated institutions or to banks that the agencies referred to the department for prosecution.
And, he said Justice is not investigating referrals that civil rights groups make. Rather, it is passing that information on to the regulators.
Nonbank lenders are not immune from fair-lending enforcement, Mr. Patrick warned. "We are looking at a couple of those kinds of issues," he said.
Mr. Patrick also tried to clarify the department's policy on so-called disparate impact cases. These cases occur when Justice claims a policy that doesn't discriminate on its face has the effect of discriminating when applied to the population as a whole. For example, requiring loan applicants to have five-year employment histories may impact minorities much more than whites.
Some industry fair-lending experts have said Justice will only let a bank off the hook for the disparate impact case if it can show a "compelling business necessity," a standard they've said is impossible to reach.
Mr. Patrick said this is not Justice's policy. Rather, Justice is following the court's definition from employment discrimination cases. That definition requires banks to show a "business necessity," which the courts define as a "compelling business explanation."
"That not that hard to do," Mr. Patrick said.
During a panel discussion earlier in the day, Richard Ritter, a former prosecutor who runs a consulting business, warned bankers to approach computerized credit scoring programs cautiously. These programs do not protect bankers from suits, and actually may increase exposure as academics and others begin challenging the industry underlying assumptions about creditworthiness standards.