How Much Lending Discrimination Exists?

• Author: McKinley, Vern

Unfair Lending: Why Discrimination in Banking Still Exists and How to Prevent It

By Tory Haggerty

156 pp.; self-published, 2022

The topic of fair lending in the United States covers a cluster of federal legislation originally signed into law during the 1960s and 1970s, including the Fair Housing Act (FHA), Equal Credit Opportunity Act (ECOA), Home Mortgage Disclosure Act (HMDA), and the Community Reinvestment Act (CRA). The enforcement of these laws often follows the political cycle, as enforcement and the amendment of the underlying regulations are decidedly a higher priority during Democratic presidential administrations than Republican.

For example, during Bill Clinton's presidency, then-attorney general Janet Reno and comptroller of the currency Eugene Ludwig led an effort to amend the underlying regulations and increase enforcement measures under the CRA. (See "Community Reinvestment Act: Ensuring Credit Adequacy or Enforcing Credit Allocation?" Winter 1994.) Candidate Clinton had campaigned on the issue, which was highlighted in his "Putting People First" campaign document. The Biden administration is now considering the state of fair lending legislation in the wake of a decreased emphasis during the Trump administration.

Tory Haggerty gives his take on the state of the fair lending laws in his new, self-published book Unfair Lending, the title of which implies that there is still a long way to go on the issue. Haggerty is a former bank examiner for the Federal Deposit Insurance Corporation (FDIC) who worked on nearly 100 fair lending compliance examinations. He now owns his own consulting business that focuses on providing advice regarding fair lending. Unfair Lending is his first book.

Types of bank examiners and fair lending / Haggerty gives some indication throughout the book of the type of work he did as a bank examiner, but he does not clearly explain the various types of bank examiners. There are so-called safety-and-soundness examiners, who "crunch the numbers" to assess the financial solvency and liquidity, asset portfolio quality, and earnings of banks, as well as the quality and judgment of bank management (so-called safety-and-soundness analysis). In contrast, the type of examiner that Haggerty was and the type most relevant to Unfair Lending is a compliance bank examiner. Compliance experts need to understand the relevant fair-lending laws and underlying regulations, as well as have some knowledge of statistical analysis...