Magazine article American Banker

Fed Resurrects a Proposal to Let Lenders Compile More Race, Gender Data

Magazine article American Banker

Fed Resurrects a Proposal to Let Lenders Compile More Race, Gender Data

Article excerpt

Reviving a controversial idea, the Federal Reserve Board issued a proposal Wednesday to let lenders voluntarily collect more data on borrowers, including their race, religion, and gender.

The Fed also proposed requiring lenders to retain business credit records for 25 months rather than the current 12 months. Finally, the proposal would require lenders to retain records on prescreened credit solicitations, including the list of criteria used to select potential recipients.

The Fed is accepting comments on the plan for three months.

The idea first surfaced in the mid-1990s when the Community Reinvestment Act rules were being rewritten. It was quickly rejected by the banking industry.

Then in March 1998, the Fed issued an advanced notice of proposed rulemaking suggesting lenders collect race and gender data on borrowers. It generated 330 letters, many from angry bankers.

Why the Fed decided to resurrect the plan was unclear on Wednesday, but industry representatives remain opposed.

Nessa Feddis, senior federal counsel of the American Bankers Association, said similar data collection requirements under the Home Mortgage Disclosure Act have not worked because the information can be arbitrary.

"What's Tiger Woods?" she said. "That's one of the complaints about HMDA data. Intellectually, it's not satisfying."

Data collection could actually foster "subtle or unconscious discrimination" by employees, Ms. Feddis said. "How do you make sure people aren't discriminating? …

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