Discrimination in credit: is ECOA part of the solution or part of the problem?

Article Abstract:

Discrimination in credit is among the leading concerns of legislators, industry regulators and consumer advocates. These groups apparently believe that there is rampant discrimination in the credit industry, even though most consumer credit decisions are made using objective criteria. Some of those who are convinced that credit decisions are biased against minorities argue that the credit criteria currently in use are fair to white borrowers, but not to non-whites. However, this argument has several flaws, including the fact that lenders cannot use race, color or national origin as credit criteria because they are often not allowed to ask borrowers for these information, except when the loan is being secured by the consumer's residence. Even in cases when data on race or national origin are required, no effort has been made to link credit performance to these consumer characteristics. Some solutions to the discrimination problem are discussed.

Analysis, Mortgage discrimination, Discrimination in consumer credit, Credit discrimination

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Spotlight on ECOA & Regulation B

Article Abstract:

Credit grantors may be severely affected by revisions made to the Equal Credit Opportunity Act (ECOA) and Regulation B. Perhaps the most significant of these changes is the one suggested for Regulation B by the Federal Reserve Board. The proposal would allow credit grantors to ask for data on race and ethnic origin, gender, marital status and age in relation to all loans. Criticis fear that this might only result in unequal approval rates for different racial or ethnic groups or for different gender. Another statement by the Federal Reserve Board is problematic. It argues that a credit scoring system could be in violation of ECOA and Reg. B if a disparate impact on a prohibited basis is present, unless seen as a business necessity. Critics argue that it ignores many pertinent, unsettled issues, such as the definition of 'disparate impact.' All parties should cooperate with one another to find ways to solve these brewing controversies.

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ECOA and Reg B...new factors effective soon

Article Abstract:

This explanation of the revised Regulation B, designed to enforce the Equal Credit Opportunity Act, is excerpted from an International Credit Conference presentation by Alan Hubbard. It is important that the regulation be understood, as creditors must comply by October 1, 1986. Also discussed are: the Equal Opportunity Act; the new guidelines; the clarification of seven credit concerns; Regulation Z; rules for evaluation applications; and B-ECOA formal actions.

Life insurance, Credit management

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