GAO Report Finds Bank Regulators Not Effectively Enforcing Fair Lending Laws
A new analysis by the General Accountability Office (GAO) found that the existing fair lending enforcement efforts by bank regulators are not working. In the GAO's Fair Lending report noted that regulators have a fragmented enforcement mechanism that impairs effective fair lending enforcement. The study also detailed deficiencies in the mortgage data currently made available through the Home Mortgage Disclosure Act (HMDA). In particular, the GAO found that a lack of data concerning borrower credit risk and race/gender information for non-residential mortgages (i.e., small business loans) limited "agencies' and regulators' capacity to identify potential lending discrimination."
The GAO reports comes at a time when congress is considering President Obama's plan for a single financial services consumer regulator--the Consumer Financial Products Agency. The GAO report may fuel the arguments of advocates who claim that the current system doesn't work, and that a consolidated enforcement agency is necessary. The GAO report also renews the debate about the adequacy of the HMDA requirements, and whether lenders should be required to report more information about their lending practices.
