Magazine article American Banker

Justice Aide Says Banks, Regulators Overreacting to Loan Bias Probes

Magazine article American Banker

Justice Aide Says Banks, Regulators Overreacting to Loan Bias Probes

Article excerpt

NEW YORK -- A Justice Department official Monday railed against bankers and regulators as overreacting to the government's fair-lending investigations.

"I really deplore the scare tactics being used," said Paul H. Hancock, chief of Justice's housing and civil enforcement section. "I understand there is a very high level of tension in the industry, and we need to dissipate that tension."

To that end, Mr. Hancock said, he and his boss, Deval Patrick, assistant attorney general for the civil rights division, have invited industry leaders to a meeting Wednesday.

Answering a question from one of the 3,000 bankers gathered here for the American Bankers Association's annual convention, Mr. Hancock said Justice only wants regulators to turn in banks that have a "pattern or practice" of discriminating against minorities. The unidentified banker had quoted his examiner as saying just one instance of discrimination would require a referral to Justice.

"Regulators are telling you things that are not correct," Mr. Hancock said. "What you're being told isn't true."

In an interview after his speech, Mr. Hancock denied any rift between Justice and the banking agencies. "We're in lock-step," he said.

Asked how that squares with the Federal Reserve's decision to approve expansion applications from Barnett Banks even though Justice is investigating the Florida institution for fair-lending violations, Mr. Hancock simply said, "The Fed has its job to do and we have our job to do." He would not comment on the Barnett investigation any further. …

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