Pursuant to a congressional request, GAO reviewed large bank holding company mergers and regulatory enforcement of the Fair Housing Act and the Equal Credit Opportunity Act, focusing on the: (1) fair lending issues raid by consumer and community groups during the application process for six large bank holding company mergers; and (2) Federal Reserve Board's (FRB) consideration of those issues.
Recommendations for Executive Action
|Board of Governors||To enhance the consideration of fair lending issues during the bank holding company merger approval process, the Board of Governors of the Federal Reserve System should develop a policy statement and procedures to help ensure that: (1) all parties asked to provide information or views about the fair lending performance of entities within the bank holding companies are given or directed to sources for structural information about the holding companies; and (2) all federal agencies responsible for helping to ensure the fair lending compliance of entities involved in the proposed merger are asked for consumer complaints and any other available data bearing on the fair lending performance of those entities.|
|Board of Governors||To aid in ongoing federal oversight efforts, the Board of Governors of the Federal Reserve System should develop a policy and procedures to ensure that it provides federal agencies relevant comment letters and any other information arising from the merger application process that pertains to lenders for which they have fair lending enforcement authority. For example, the other agencies may be interested in receiving FRB's Home Mortgage Disclosure Act analysis as well as the other data obtained and analyzed by FRB in response to the fair lending allegations raised in the comment letters.|
|Board of Governors||The Board of Governors of the Federal Reserve System should monitor the lending activity of nonbank mortgage subsidiaries and consider examining these entities if patterns in lending performance, growth, or operating relationships with other holding company entities indicate the need to do so.|