On November 14, Office of the Comptroller of the Currency (OCC) Senior Deputy Comptroller for Bank Supervision Policy Grovetta Gardineer delivered keynote remarks at the 2022 CRA & Fair Lending Colloquium where she discussed the OCC’s commitment to “elevating fairness” and ongoing efforts to ensure its regulated institutions comply with the federal fair lending laws. In her comments, Gardineer explained how the OCC will strategically execute on its commitment to fair lending through the agency’s focus on three strategic goals for 2023-2027: (1) agility and learning; (2) credibility and trust; and (3) leadership in supervision.
Among other things, Gardineer highlighted the OCC’s continued focus on rooting out redlining practices, which is part of a governmentwide “Combatting Redlining Initiative” announced by the U.S. Department of Justice in October 2021, including redlining training for examiners. Importantly, she noted that the OCC is preparing to publish a “comprehensive update” to the agency’s fair lending examination procedures, which have not been updated since 2010. The updated fair lending exam procedures will be accompanied by training for examiners and the industry. In addition, the OCC will be establishing a centralized tracking and monitoring system to collect and analyze fair lending examination information, as well as enhancing technical support for examiners’ use of the agency’s fair lending risk assessment and providing additional information to the industry about it.
A summary of Gardineer’s remarks is set forth below.
Agility and Learning
- According to Gardineer, the OCC routinely reviews and updates its annual risk-based processes for screening HMDA data to ensure examiners focus on banks with higher fair lending risk. This allows the OCC to better deploy resources and identify weaknesses and potential discriminatory practices.
- The OCC also has a framework in place to ensure that banks are following fair lending rules as they incorporate advanced analytics, such as artificial intelligence, into underwriting systems and fair lending risk management programs.
- The OCC is working to strengthen its fair lending supervisory activities by enhancing its available tools, resources, and training.
- For example, the OCC is preparing to publish a comprehensive update to the Fair Lending Booklet of the Comptroller’s Handbook accompanied by training for examiners and the industry on the updates.
- Additionally, in response to a recommendation included in a June 2022 U.S. Government Accountability Office report on the OCC’s oversight of fair lending practices, the OCC is creating a centralized tracking and monitoring system to collect and analyze information related to fair lending examinations.
Credibility and Trust
- As part of its commitment to reduce inequality and address the racial wealth gap, the OCC has taken an active role on the Interagency Task Force on Property Appraisal and Valuation Equity (PAVE), a “whole of government” initiative to evaluate the causes, extent, and consequences of appraisal bias. The OCC has committed to several actions in the PAVE action plan, including:
- Issuing frequently asked questions to provide better information and transparency to consumers regarding appraisal practices and requirements;
- Issuing guidance regarding customers’ rights to request a reconsideration of value;
- Strengthening coordination among supervisory and enforcement agencies to identify both safety and soundness and fair lending concerns that result from bias in appraisals; and
- Expanding regulatory agency examination procedures of mortgage lenders to include identification of patterns of appraisal bias.
- The OCC is also in the process of developing other internal measures to enhance credibility and trust, including improving supervisory methods for identifying potential discrimination in property valuations, and raising consumers’ awareness of their rights regarding appraisals.
Leadership in Supervision
- Gardineer stressed the OCC’s continued collaboration with interagency colleagues.
- For example, after the Consumer Financial Protection Bureau and U.S. Department of Housing and Urban Development issued new guidance regarding special purpose credit programs, the OCC and other federal agencies issued an interagency statement to remind creditors of their ability under the Equal Credit Opportunity Act and Regulation B to expand credit access for economically or socially disadvantaged consumers and commercial enterprises.
- The OCC also has an initiative known as Project REACh (Roundtable for Economic Access and Change) to reduce inequality in banking. Through Project REACh, the OCC convenes leaders from banking, business, technology, community advocates, and national civil rights organizations to reduce specific barriers that prevent full, equal, and fair participation in the nation’s economy.
Gardineer concluded her remarks by reiterating the OCC’s focus on fair lending and, particularly, eradicating redlining practices. “You can trust that we are laser focused on fair lending. It is simply not acceptable that redlining and other forms of lending discrimination continue in the year 2022 and beyond. As I like to remind everyone, a bank simply cannot truly be safe and sound if you are not treating your customers fairly.”