United States Government Publishing Office publisher pbl distributor dst United States Government Accountability Office General Government Division author aut Government Organization text government publication eng GAOREPORTS Legislative Agency Publications gao legislative 2010-08-12 U.S. Government Printing Office 1999-11-03 monographic deposited born digital 56 p. GA 1.13:GGD-00-16 https://www.govinfo.gov/app/details/GAOREPORTS-GGD-00-16 P0b002ee18039d2c2 f:gg00016 DGPO 2010-08-12 2011-03-24 GAOREPORTS-GGD-00-16 machine generated eng fdlp REPORT GAOREPORTS-GGD-00-16 GGD-00-16 Mortgage loans Racial discrimination Bank holding companies Banking regulation Bank examination Lending institutions Reporting requirements Law enforcement Corporate mergers Letter Report GGD

Pursuant to a congressional request, GAO reviewed large bank holding company mergers and regulatory enforcement of the Fair Housing Act and the Equal Credit Opportunity Act, focusing on the: (1) fair lending issues raid by consumer and community groups during the application process for six large bank holding company mergers; and (2) Federal Reserve Board's (FRB) consideration of those issues.<p/>GAO noted that: (1) in each of the six mergers, consumer and community groups raised the issue of perceived high loan denial and low lending rates to minorities by banks, bank subsidiaries, and nonbank mortgage subsidiaries involved in the mergers; (2) in four merger cases, community and consumer groups were concerned about alleged potential discriminatory practices of the holding companies' nonbank mortgage subsidiaries; (3) nonbank mortgage subsidiaries are not subject to routine examinations by federal regulators for compliance with fair lending and other consumer protection laws and regulations; (4) the fair lending laws generally confer enforcement, authority for nonbanking companies with the Federal Trade Commission, Department of Housing and Urban Development, or Department of Justice and do not specifically authorize any federal agency to conduct examinations of nonbanking companies for compliance with these laws; (5) the consumer and community groups were concerned that: (a) sub-prime lending activities of the nonbank mortgage subsidiaries had resulted or could result in minorities being charged disproportionately higher rates and fees; and (b) minority loan applicants were being "steered" between the affiliated banking or nonbank subsidiaries of the holding company to the lender that charged the highest rates or offered the least amount of services; (6) other fair lending issues included alleged discriminatory prescreening and marketing, low lending rates to minority-owned small businesses, discriminatory treatment of applicants, and redlining; (7) FRB considered these fair lending issues in the six merger cases by analyzing information from various sources, including the bank holding companies involved in the mergers and other federal and state agencies; (8) FRB staff analyzed Home Mortgage Disclosure Act data provided annually by the banks and nonbank mortgage subsidiaries involved in the mergers; (9) FRB staff stated that they placed heavy emphasis on prior and on-going compliance examinations performed by the appropriate primary banking regulators for the banks involved in the merger; (10) examinations for nonbank mortgage subsidiaries were generally not available because these entities are not routinely examined by any federal agency; (11) in two of the six mergers in GAO's review, FRB has previously performed compliance investigations of nonbank mortgage subsidiaries involved in the mergers; and (12) according to FRB staff, FRB had used its general examination and supervisory authority for bank holding companies to conduct these particular investigations. https://www.govinfo.gov/content/pkg/GAOREPORTS-GGD-00-16/html/GAOREPORTS-GGD-00-16.htm https://www.govinfo.gov/content/pkg/GAOREPORTS-GGD-00-16/pdf/GAOREPORTS-GGD-00-16.pdf GAO/GGD-00-16 https://www.govinfo.gov/app/details/GAOREPORTS-GGD-00-16 Letter Report GAO/GGD-00-16; Large Bank Mergers: Fair Lending Review Could be Enhanced; Mortgage loans Racial discrimination Bank holding companies Banking regulation Bank examination Lending institutions Reporting requirements Law enforcement Corporate mergers Title 15 Section 1691c-1(1996) 15 U.S.C. 1691c-1(1996)