House committee seeks GAO fair-lending enforcement review.

House Financial Services Committee Chairman Barney Frank, along with 15 members of the committee, have called upon the Government Accountability Office (GAO) to conduct a "comprehensive review" of the current state of federal fair-lending enforcement.

In a letter to GAO Acting Comptroller Gene Dodaro, dated and released to the public April 21, the members expressed concern over the thoroughness and effectiveness of federal regulators' oversight and enforcement of fairlending laws--including the Equal Credit Opportunity Act (ECOA), the Home Mortgage Disclosure Act (HMDA), the Fair Housing Act and other related fair-lending laws.

To that end, the committee members have asked GAO to study mortgage lending and other types of lending, such as small-business and unsecured lending.

"We are troubled that HMDA data continue to reveal significant racial and ethnic disparities in mortgage lending, particularly in the incidence of higher-priced lending to minorities," committee members stated in their letter. "However, because current HMDA data lack key variables involved in the underwriting process, such as borrowers' credit history, debt-to-income ratio and loan-to-property value, we understand that HMDA data alone cannot be used to determine whether lenders are violating fair-lending laws."

For this reason, committee members said they would like the GAO to conduct an independent and comprehensive assessment of federal regulators' monitoring and enforcement of fair-lending laws, including the Federal Reserve, Federal Deposit Insurance Corporation (FDIC), National Credit Union Administration (NCUA), Office of the Comptroller of the Currency (OCC), Office of Thrift Supervision (OTS), Department of Justice and HUD, and to study how the shortcomings regarding the data collected might be overcome.

Specifically, committee members requested that GAO conduct a review of:

* The level and adequacy of resources that federal regulatory agencies have dedicated to the monitoring and enforcing of fair-lending laws and to detecting lending discrimination in all forms;

* The benefits and limitations of HMDA data as a tool for citizens and public officials to detect potential lending discrimination, as well as the extent to which the federal regulators have leveraged HMDA data to further their oversight and enforcement efforts;

* The extent to which federal regulatory agencies comply with existing examination procedures and other programs designed to identify potential violations of fair-lending laws and the extent to which these procedures are effectively detecting lending discrimination in all its forms;

* The consistency and effectiveness of federal regulatory efforts to follow up on potential violations of fair-lending laws through administrative means and through referrals of potential illegal activity to the Department of Justice and HUD;

* The adequacy and effectiveness of the procedures and standards used by the Department of Justice and HUD to determine whether to pursue a referral or return the referral back to the primary federal regulatory agencies for administrative resolution; and

* Whether other data-collection methodologies would help in detecting and eliminating lending discrimination in all its forms.