CUNA Regulatory Comment Call
August 18, 1999
Fed Proposal to Allow Lenders to Collect More Data on Borrowers
(This Regulatory Comment Call is substantially similar to the one that was issued on June 25 regarding this proposed rule. There was a significant delay between the date the Federal Reserve Board (Fed) issued the rule and the date that it was published in the Federal Register. Fed staff indicated that the delay was due to the significant time that was needed to make necessary changes to the commentary and to make other necessary technical changes. Because of the time delay, this Regulatory Comment Call has been revised to provide the comment due date and to provide a link to the proposed rule. We also want to note that the Fed is requesting comments for other revisions to Regulation B that would facilitate compliance.)
On June 23, 1999, the Fed unanimously agreed to issue a proposed rule containing changes to Regulation B, which implements the Equal Credit Opportunity Act (ECOA). The proposal would permit lenders to voluntarily collect more data on borrowers, including information on their race, religion, gender, and national origin. Comments on the proposal are due by November 10, 1999. Please submit your comments to CUNA by November 1 by fax at (202) 371-8240 or e-mail to CUNA's Assistant General Counsel Jeffrey Bloch at firstname.lastname@example.org. You do not need to resend any comments that have already been sent in response to the Regulatory Comment Call issued on June 25. The rule may also be obtained from the Federal Register Website. When searching on this Website, please refer to the August 16, 1999 edition of the Federal Register.
Currently, the ECOA prohibits lenders from making credit decisions on non-mortgage loans based on certain prohibited factors, such as the race, religion, gender, and national origin of the borrower. In March 1998, the Fed issued an advanced notice of proposed rulemaking, which solicited input on the issue of whether lenders should be permitted to collect such information. The Fed received 330 comment letters and is now issuing a proposed rule that would permit such collections.
BRIEF DESCRIPTION OF THE PROPOSAL
Although the proposal would permit the voluntary collection of information regarding race, religion, gender, and national origin, borrowers would not be required to provide such information if they choose not to do so. The proposal would also require lenders to retain records on prescreened credit solicitations. These records would include the list of criteria used to select potential recipients, the solicitation used, the correspondence related to the solicitation, and the marketing plan to which the solicitation relates. Lenders would also be required to retain business credit records for 25 months, rather than the current 12 months.
QUESTIONS TO CONSIDER REGARDING THE FED'S REGULATION B PROPOSAL
- Are you concerned that the additional data could be used unfairly by the regulators and the Justice Department?
- Do you believe that the proposal will increase regulatory burden? For example, do you believe examiners will pressure lenders to collect this additional data or otherwise place lenders under special scrutiny to insure that the data is not used to discriminate?
- Do you believe that the collection of the additional data would facilitate discrimination by a lender's employees or do you believe that the collection would assist regulators and the Justice Department in their efforts to uncover such discrimination?
- Should the changes to Regulation B include standards describing how the additional data should be collected or would such standards place unnecessary additional burden on lenders?
- Do you believe that the collection of the additional data would assist lenders in efforts to target underserved markets?
- Would the provisions regarding the retention of records on prescreened credit solicitations hinder your marketing efforts?
- Do you believe credit union members would regard the collection of the additional data as an invasion of privacy?
Leagues and credit unions should feel free to fax their responses to CUNA at 202-371-8240; e-mail them to Jeffrey Bloch at email@example.com or mail them to CUNA's Regulatory Advocacy Department, Suite 300, 805 15th Street, NW, Washington, DC 20005. Thank you!!
Eric Richard General Counsel (202) 508-6742 firstname.lastname@example.org |
Mary Mitchell Dunn SVP & Associate General Counsel (202) 508-6736 email@example.com
Jeffrey Bloch Assistant General Counsel (202) 508-6732 firstname.lastname@example.org
Catherine Orr Senior Regulatory Counsel (202) 508-6743 email@example.com