The Bureau of Consumer Financial Protection issued its seventh Fair Lending Report to Congress. The report, released June 28, 2019, describes the Bureau's fair lending activities in prioritization, supervision, enforcement, rulemaking, interagency coordination, and outreach for calendar year 2018.
We have discussed previously in various posts some of the challenges of using regression and other statistical methods for fair lending reviews as well as the current emphasis on quantitative methods. Over the last 10 years, the regulatory and enforcement agencies as well as institutions have been gravitating more and more towards statistical methods when it comes to assessing fair lending performance and issues.
The FDIC released a compliance summary noting key findings and performance of the banks examined in 2018. The report states:
In a speech on June 12, 2019, at CATO Summit on Financial Regulation, FDIC Chair McWilliams talked about the nation and the banking system’s role in society and economic well being. Drawing extensively from her own background and experiences as an immigrant to the United States, she noted one role of the FDIC as promoting economic inclusion.
FDIC insured institutions report $60.7 billion in aggregate net income in the first quarter of 2019, an 8.7 percent increase from a year earlier. Net interest income increased by $7.9 billion from a year earlier, explaining the jump in overall net income. Nearly 80 percent of banks reported increased net interest income from a year earlier, and the average net interest margin rose from 3.32 percent to 3.42 percent.
In previous posts we have emphasized the importance of customer service as an aspect of managing fair lending risk. Since fair lending deals primarily with treatment of applicants, and the agencies recognize that discrimination can take place at any aspect of the transaction, inconsistency in levels of service could constitute fair lending risk. Consequently, having good customer service that is consistent among all staff is an important piece of risk management.
The federal financial institution regulatory agencies issued updated FAQs for the new accounting standard on credit losses. The newly issued FAQs include both changes to previously issued FAQs and new FAQs.
In a speech earlier this year, FDIC Chair Jelena McWilliams provided some insights concerning her vision with regard to bank regulation.
Changing and advancing technology continues to impact the financial services industry. This influence is far reaching, and has implications not only related to consumer preferences but also to raise policy and regulatory questions.
The Office of Inspector General issued a report dated January 28, 2019 with recommendations designed to improve the Bureau Division of Supervision, Enforcement and Fair Lending’s (SEFL) Matters Requiring Attention (MRA) follow-up process.