WASHINGTON - Thrifts are knocking a federal proposal to collect more information on subprime lending as misguided and potentially harmful.
In August the Office of Thrift Supervision proposed revisions to the quarterly financial reports filed by the 1,091 institutions it supervises. Among other things, the plan would require thrifts involved in subprime lending to provide more data on eight categories of loans, starting in the first quarter.
In comment letters that were due Oct. 3, industry officials criticized the agency's definition of subprime lending as vague and said the proposal would lump the risky loans the OTS is trying to monitor with sound, higher-cost loans to borrowers in underserved communities.
Echoing the commercial bankers who recently complained about similar efforts by bank regulators, thrift officials said the proposal could interfere with attempts to address legitimate credit needs in their areas.
Charlotte M. Bahin, director of regulatory affairs for America's Community Bankers, wrote that the regulators' "overly broad" definition of subprime lending - extending credit to borrowers who have a significantly higher risk of defaulting than traditional borrowers - could be interpreted differently by every institution.
Martha Pampel, a senior counsel for Household International Inc., a Prospect Heights, Ill., thrift holding company, wrote that thrifts may attract "unwarranted negative attention," because the public mistakenly perceives all subprime lending as predatory and overly risky.
"There is the continuing confusion in the media and elsewhere between 'subprime' and 'predatory' lending," she wrote. "There is the often implied (yet false) assumption that 'subprime' necessarily involves a higher amount of institutional risk than more traditional 'prime' lending, accompanied by the likelihood of higher capital costs."
