Attorney General Janet Reno warned bankers Thursday that even unintentional lending discrimination will be prosecuted.

"I would urge all of you today to reconsider what you are doing to ensure you are as fair as possible in your lending practices," Ms. Reno said. "Everyone should be treated fairly in seeking a loan."

Despite the enforcement warning, the attorney general praised the industry's efforts to eradicate lending bias.

"I have been so impressed with bankers over these past four years," Ms. Reno said at a conference dedicated to increasing lending to Native Americans. "I don't think I have met a banker yet who would in any way condone discrimination."

Ms. Reno said she was especially impressed by those banks that look for "subtle, or accidental, or unappreciated discrimination" in the marketing and underwriting of loans.

"Every community needs fair access to credit, including American Indian communities," she said.

Two of the 11 lending discrimination cases pressed by the Justice Department have involved bank lending on Indian reservations.

The government sued Blackpipe State Bank, Martin, S.D., in 1993 and First National Bank of Gordon, Neb., in 1996 for charging Native Americans higher loan rates than whites. Both banks agreed to compensate bias victims and to institute fair-lending programs.

Under Ms. Reno, the Justice Department has accused banks of charging minorities more for loans than whites, holding minorities to higher underwriting standards than whites, and refusing to serve low-income, minority communities. In settling 11 cases, the department collected $20 million for more than 1,000 victims.

Most of the cases to date have involved blatant acts of discrimination, such as loan officers overcharging blacks and Hispanics. Ms. Reno's announcement Thursday means the department's focus is shifting to bank policies that make it harder or more expensive for minorities to get credit.

Lenders at the conference supported Ms. Reno's focus on unintentional bias.

"The problem is that many rural banks are not very sophisticated," said Gerald Sherman, community development officer at First Interstate Bank of Commerce, Billings, Mont. "Sometimes they think they are doing the right thing when in fact they are not."

Stephanie M. Harmon, national outreach manager for GMAC Mortgage Co., Horsham, Pa., said many lenders do not make enough loans on reservations to understand the market. As a result, they reject creditworthy applicants.

"They don't understand the culture and way of living," Ms. Harmon said. "Until you step in and understand the culture, it is hard to understand how they can meet your credit guidelines."

Ms. Reno also urged Indians to establish banks, noting that several tribes have created institutions that specialize in housing and economic development loans.

Earlier in the conference, Comptroller of the Currency Eugene A. Ludwig lauded banks for increasing their presence on Indian reservations. For instance, he said banks now operate 12 branches on the Navajo reservation, a threefold increase from 1994.

Still, he said the industry must do more. "Providing financial services in Indian country continues to pose serious challenges-challenges which cannot be overcome without serious, persistent efforts on all sides," he said.

To assist bankers, the OCC released a guide to mortgage lending on reservations Thursday. It explains how to collateralize mortgages, details which government loan guarantee programs are available to Indians, and discusses how to comply with the consumer protection laws.

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