Magazine article American Banker

'Testers' for Loan Bias in Banks Would Be Required by Kennedy

Magazine article American Banker

'Testers' for Loan Bias in Banks Would Be Required by Kennedy

Article excerpt

|Testers' for Loan Bias in Banks Would Be Required by Kennedy

WASHINGTON -- Rep. Joseph P. Kennedy 2d, D-Mass., plans to offer an amendment this week that would require regulators to send "testers" into all U.S. banks in search of lending discrimination against women and minorities.

The measure, which is to be offered as an amendment to the omnibus banking bill, would also require a more critical look at lending patterns and require "prompt corrective action" by banks that discriminate.

A separate section of the Kennedy amendment would require banks that want to branch interstate to make commitments explaining how they will meet Community Reinvestment Act requirements. Institutions with less than $100 million in assets would be exempt.

Kennedy's 1989 Victory

The House is to take up the bill Wednesday or Thursday, although some indications this week were that the vote could be delayed.

Rep. Kennedy, who shocked bankers two years ago with a floor victory that dramatically expanded reporting requirements under the Home Mortgage Disclosure Act, is being taken seriously this year.

First, a recent Federal Reserve report, which showed that banks turn down minority mortgage applicants up to 2.4 times more often than other borrowers, has created a receptive atmosphere on Capitol Hill for Rep. Kennedy.

And most bank industry lobbying resources are being directed at a section of the bill that bankers believe would place unworkable restrictions on new securities powers, while rolling back existing authority to market insurance. …

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