WASHINGTON -- The Justice Department's allies fought back last week, as a key House chairman asked thrift regulator Jonathan Fiechter to explain his criticism of the administration's fair-lending prosecutions.

Rep. John Conyers, D-Mich. chairman of the House Government Operations Committee, said Mr. Fiechter's comments could undermine Justice's "efforts to vigorously enforce the laws that Congress has passed to prohibit discrimination in the provision of credit by our nation's financial institutions."

In his Oct. 25 letter to Mr. Fiechter, Rep. Conyers asked the thrift regulator to provide a large number of documents, including correspondence with Justice, legal opinions, and records of meetings.

A number of sources said the Conyers letter was aimed at bringing pressure on regulators to back the Department of Justice, or at least to refrain from criticizing it.

"There is no doubt about the fact that a lot of what is going on within the regulatory agencies generally is a response to legislative pressure," said Edward L. Yingling, chief lobbyist for the American Bankers Association.

Often, he added, that pressure is manifested when regulators are brought before congressional committees for oversight hearings.

"But the ability of a member of Congress, particularly a committee chairman, to ask for thousands of documents has the same effect," Mr. Yingling added.

Mr. Fiechter, in an initial response to Mr. Conyers, said he had been surprised at press accounts of his speech to the annual convention of the Savings and Community Bankers of America, and he provided a copy of his speech.

"Let me assure you, I take your concerns very seriously," he added. "I fully support vigorous enforcement of federal laws prohibiting lending discrimination. I have had my staff work closely with the Department of Justice on a variety of fair-lending matters."

The thrift regulator pledged to work with Rep. Conyers' staff to draft a comprehensive response to the lawmaker's letter, which he said should be ready within the next several weeks.

Others in the industry expressed surprise at the Conyers letter.

"It's hard to see what Fiechter said that they object to," said Steven Zeisel, senior counsel for the Consumer Bankers Association.

In an Oct. 18 speech to the Savings and Community Bankers of America, Mr. Fiechter said the Justice Department employed legal theories "untested in the courts" in its prosecution of. Chevy Chase Federal Savings Bank. In addition, he warned that Justice's position could force insitutions to open branches that cannot be justified economically. "This new conception of redlining presents head-on the question of why some neighborhoods have more branches than other neighborhoods," Mr. Fiechter said in his speech.

"Clearly it is wrong for a financial institution to refuse to market its own products to an area solely because of the race of its resident," he added. "But it may be rational for a financial institution to focus its marketing efforts on higher-income, higher-net-worth areas."

Mr. Fiechter raised the question of what standards the government should use to determine whether a decision to avoid a low-income neighborhood is an acceptable business decision.

In his letter, Rep. Conyers noted that Mr. Fiechter is an ecnomist rather than a lawyer.

"Please supply all legal opinions prepared prior to Oct. 18, 1994, supporting your claim that the DOJ is relying on an 'untested' legal theory," the congressman wrote.

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