by Benjamin P. Saul, Amanda M. Raines and Ann D. Wiles
In response to heightened
regulatory and enforcement scrutiny of non-mortgage consumer credit, this
Emerging Issues Analysis addresses important considerations for conducting fair
and responsible banking risk assessments for non-mortgage lines of business.
Although experience from mortgage risk assessments provides a useful framework,
non-mortgage lines of business present special considerations, both in terms of
substance and execution.
Fair and responsible banking
risk assessments - by which financial institutions identify, measure, control,
and monitor their lending and, more recently, servicing activities to prevent
discriminatory, unfair, deceptive, abusive, and predatory acts and practices -
have long been part of the compliance function within financial institutions.
To date, the literature on such assessments has focused largely on how to
conduct them on mortgage business lines, but has not addressed non-mortgage
operations, such as credit card, student, and automobile lending. The
mortgage-centric focus of most articles results, in part, from historically
greater regulatory, enforcement, and litigation scrutiny of the mortgage
business. Moreover, Home Mortgage Disclosure Act ("HMDA") data, which
identifies applicants in protected classes, simplifies the quantitative
components of a fair and responsible banking risk assessment. Outside the
mortgage context, the difficult questions of whether, and how, to conduct such
risk assessments have received scant attention.
The current regulatory environment renders timely consideration of whether, and
if so how, financial institutions can best assess fair and responsible banking
risks in their non-mortgage business lines. This may be especially true for
mono-line and non-bank institutions that historically may not have conducted
such risk assessments, and for more diversified financial institutions that may
have conducted these assessments with less emphasis on measuring non-mortgage
Recently, regulators, the Department of Justice ("DOJ"), and state
attorneys general have sharpened their focus in examinations and investigations
of non-mortgage lines of business. In particular, the Consumer Financial
Protection Bureau ("CFPB"), which has examination and enforcement
authority under the Equal Credit Opportunity Act ("ECOA") and
Regulation B has made clear that it will use this authority across the entire
spectrum of consumer credit, especially credit card, student, and auto lending.
In response to the heightened regulatory and enforcement scrutiny of
non-mortgage consumer credit, this Emerging Issues Analysis addresses several
important considerations for conducting fair and responsible banking risk
assessments for non-mortgage lines of business. Although experience from
mortgage risk assessments provides a useful framework, non-mortgage lines of
business present special considerations, both in terms of substance and
execution. [footnotes omitted]
Access the full version of "Why Fair and Responsible
Banking Risk Assessments Are Important For Non-Mortgage Business Lines"
with your lexis.com ID. Additional fees may be incurred.
If you do not have a lexis.com ID, you can purchase this commentary and additional Emerging Issues Commentaries from the LexisNexis Store.
Lexis.com subscribers can access the complete
set of Emerging Issues Analyses for Banking & Financial Services
Law and the Banking & Financial Services Area of Law page.
For more information about LexisNexis
products and solutions connect with us through our corporate site.
Benjamin P. Saul has a nationwide practice representing corporate
and individual clients in high-stakes administrative enforcement and
criminal matters, private civil and class action litigation, and
parallel proceedings involving private litigants and federal and state
enforcement authorities. He also conducts corporate internal
investigations and advises financial services and other clients on
compliance issues and programs. He has represented clients in matters
initiated by the Congress, DOJ, CFPB, HUD, FTC, SEC, federal and state
banking authorities, and state attorneys general. Mr. Saul has extensive
experience counseling troubled banks, bank holding companies, and their
boards of directors and officers on complex regulatory, litigation,
enforcement and personal liability issues. He is a member of the Board
of Editors of the Review of Banking & Financial Services andthe
Editor-in-Chief of the Banking Law Committee Journal. Amanda M. Raines
represents financial services industry clients in federal and state
enforcement agency investigations and litigation, as well as in private
civil and class action litigation. She has represented clients in
investigations by the Department of Justice, the SEC, the FDIC, and
state attorneys general, as well as in private class action litigation
involving securities fraud, tax fraud, the Fair Housing Act, the Equal
Credit Opportunity Act, the Civil Rights Act, and unfair and deceptive
trade practices statutes. Ms. Raines received her J.D. from Case Western
Reserve University School of Law, where she was the managing editor of
the Case Western Law Review. Ann D. Wiles
represents corporate and individual clients in litigation and
enforcement matters, including criminal and complex civil litigation,
internal investigations, government enforcement actions, and appellate
matters. She has represented clients in cases involving the Foreign
Corrupt Practices Act, False Claims Act, securities fraud, privacy and
data breaches, tax evasion, employee misconduct, gaming regulations,
intellectual property disputes, and antitrust investigations. Ms. Wiles
has assisted clients in foreign criminal proceedings, in actions before
foreign securities regulatory agencies, and in internal investigations.
She received her J.D. from Vanderbilt University Law School, where she
was Associate Editor for the Vanderbilt Law Review.