Fair Lending Enforcement Program

FAIR LENDING ENFORCEMENT PROGRAM

January 2001

INTRODUCTION

The Department of Justice has been particularly concerned with home mortgage lending, because owning a home is so important to American families. Families who can buy a home actually purchase more than four walls and a roof. For all but the wealthiest of Americans, buying a home is the most significant financial investment they will ever make. Frequently, a home provides a source of equity to finance a child's education, which itself means better job opportunities and more purchasing power for the future. A family home is usually the largest asset passed along to heirs, to build wealth for future generations. And beyond the immediate benefits to a family, homeownership is vital to neighborhood stability and key to promoting safer streets and better schools. The intangible benefits are great, too. Who among us does not find peace and satisfaction in having a place to call our own? That is why it is central to the American dream.

Both the Fair Housing Act, passed in 1968, and the Equal Credit Opportunity Act, passed six years later in 1974, prohibit discrimination in home mortgage lending. Some of the discriminatory and unfair lending practices that were prevalent across the country before these two laws went into effect have been eliminated. More housing opportunities have become available to more people. Capital for home purchase and improvement has become accessible to more and more Americans. Homeownership rates have increased for all Americans, but particularly for minorities. From 1993 to 1998, home mortgage loans to African-American and Hispanic borrowers increased dramatically by 72% and 87% respectively. Loans increased 52% for Native Americans, 46% for Asians and 31% for whites. We can be pleased with this progress.

At the same time, we must not fail to acknowledge and be deeply concerned that, for too many others, the promise of equal housing opportunities and the dream of homeownership remain elusive. According to HUD figures, by the end of 1999, only 46.7% of African-American families and 45.5% of Hispanic families were homeowners, compared with 73.2% for whites. These disparities in homeownership rates have contributed, in turn, to the tremendous wealth gap that still exists between whites and nonwhites. Yochi J. Dreazen, U.S. Racial Wealth Gap Remains Huge, Wall St. J., March 14, 2000, at A2. During the 1990's most African-American and other minority families were still striving to purchase a home, while whites who were already homeowners were able to make other investments, particularly in stocks, that accounted for a large portion of the country's new wealth during the decade.

Fair lending enforcement alone cannot erase the gaps in income and wealth. But it is critical that all members of our society be guaranteed an equal chance. Moreover, eliminating discrimination in lending is not just a civil rights issue. It is good for business and the economy. As Chairman Alan Greenspan of the Federal Reserve Board has observed, "[t]o the extent that market participants discriminate -- consciously or, more likely, unconsciously -- ... costs are higher, less real output is produced, and national wealth accumulation is slowed." Chairman Alan Greenspan, Remarks at the Wall Street Project Anniversary Conference of the Rainbow/PUSH Coalition, New York, New York (Jan. 16, 1998).

The Justice Department has worked hard in the last eight years to eliminate discriminatory lending practices by bringing enforcement actions under the Fair Housing Act and the Equal Credit Opportunity Act (ECOA). Our efforts have been directed to three types of issues. We have challenged marketing practices to insure that the availability of loans was not being determined by the racial or ethnic make-up of neighborhoods. We have challenged underwriting policies and practices to insure that lenders apply the same standards for assessing creditworthiness to all applicants and provide all applicants with the same level of assistance in completing the application process. We have challenged pricing practices to insure that minorities and other protected groups do not pay more for credit than other similarly situated borrowers. Since the inception of our fair lending initiative in 1992, the Department has filed 16 major fair lending lawsuits and obtained more than $63 million in monetary relief. Ten of these suits were based on referrals from the federal bank regulatory agencies, and six were the results of our own investigations. All of these cases have been resolved. We have also participated in two fair lending suits brought by private plaintiffs. Most of our cases have dealt with home purchase or home improvement loans. A few addressed consumer lending issues. Continued efforts to address discrimination in these issues is needed, and small business lending is another area that needs attention.

Marketing Discrimination - Redlining

Marketing discrimination, sometimes called "redlining," has been the focus of several Department of Justice cases against lenders. In 1993, we challenged the policies of Blackpipe State Bank in South Dakota, alleging that the bank was refusing to make secured loans to Native Americans residing on Reservation land, even though the land was within the bank's natural service area. Loans to purchase automobiles, mobile homes or farm equipment were simply unavailable to Native Americans living on Reservation land. This bank policy limited their ability to make the types of purchases that enable people to own and maintain a decent home, travel to and from a job, or work a farm. We alleged that the policy was not justified by business considerations, and the institution that was purchasing the Blackpipe Bank at the time of our lawsuit readily agreed to change the policy and offer secured financing in Indian Country. The bank also agreed to set up a fund to compensate victims of its discriminatory policies, to establish a special marketing program designed to attract qualified loan applicants from Indian Country, to appoint a compliance officer to ensure that all applicants receive equal consideration in the loan process, to conduct financial seminars on Indian reservations, and to recruit qualified Native American applicants for job openings at the bank. United States v. Blackpipe State Bank, Civil Action No. 93-5115 (D.S.D. 1993).

In a suit against Chevy Chase Bank, located in a suburb of Washington, D.C., we alleged that the bank had refused to market its mortgage loans and other credit products in minority neighborhoods. In 1992, before we began our investigation, Chevy Chase made only a handful of mortgage loans in African-American neighborhoods in the District of Columbia and Prince George's County, Maryland, which had the nation's lowest disparity in income levels between African-American and white residents. Under the Consent Decree we reached with the bank in 1994, Chevy Chase agreed to make $11 million in loans to the neglected areas through a special program and to open bank branches and mortgage offices in African-American neighborhoods in the District of Columbia and in Prince George's County, Maryland. By 1995, approximately 60% of the loans made by Chevy Chase were secured by properties in African-American neighborhoods. United States v. Chevy Chase Federal Savings Bank, Civil Action No. 94-1824(JG) (D.D.C. 1994).

In 1997, we brought a suit against Albank, a thrift institution headquartered in Albany, New York. Albank initially made home mortgage loans only out of its branches located in Albany and other nearby towns and cities. In the mid 1980s, the bank decided to expand its mortgage lending into Connecticut and Westchester County, areas where it had no branches, and it began for the first time to take loans through "correspondents" or mortgage brokers. In the late 1980s, Albank began instructing the correspondents that it would not take loans from certain cities in Connecticut and parts of Westchester County. We alleged that Albank had no legitimate business justification for limiting its market in the way it did. The only areas in Connecticut with significant African-American and Hispanic populations were the cities excluded by Albank. In Westchester County, 76% of the County's African Americans and 66% of the County's Hispanics lived in the areas excluded by Albank.

The Albank consent decree required the lender to abandon its geographic limitations and to make $55 million in loans at below-market rates to residents of the minority areas that were previously excluded, at an estimated cost to Albank of $8 million. Albank was also required to fund education and mortgage counseling services for residents of the excluded areas. United States v. Albank, FSB, Case No. 97-CV-1206 (N.D.N.Y. 1997).

Underwriting Discrimination

Discrimination in underwriting -- the process of evaluating the qualifications of credit applicants -- was the issue in our investigations leading to suits against Decatur Federal Savings & Loan Association in Atlanta, The Northern Trust Company in Chicago, and First National Bank of Doña Ana County in New Mexico. United States v. Decatur Federal Savings & Loan Association, Case No. 1 92-CV-2198-CAM (N.D. Ga. 1992); United States v. The Northern Trust Company, Civil Action No. 95C 3239 (N.D. Ill. 1995); United States v. First National Bank of Doña Ana County, Civil Action No. 97-0096 HB (D.N.M. 1997). Our attention was focused on these institutions by Home Mortgage Disclosure Act (HMDA) statistics showing that African-American and Hispanic applicants were rejected for mortgage loans at significantly higher rates than were white applicants. When our lawyers examined loan files, they uncovered disturbing evidence that bank employees were providing assistance to white applicants that they were not providing to African-American and Hispanic applicants. Loan officers often did not help minority applicants explain negative information on their credit reports and document all of their income. Similar loan officer behavior was responsible for the inordinately high denial rate of African-American applicants underlying the Federal Reserve Board's referral to us of the Shawmut Mortgage Company in Boston. United States v. Shawmut Mortgage Company, Case No. 3:93CV-2453 (AVC) (D. Conn. 1993). The relief we obtained in these four underwriting suits included fair lending training for loan officers, advertising and marketing to minority communities, "second reviews" of rejected minority applications, and new bank branches in minority neighborhoods. Our lawsuits against these lenders, and follow-up bank examinations by the regulatory agencies, have focused lending industry attention on this issue and, we hope, encouraged lenders to institute a variety of programs to prevent disparate treatment.

Lenders are now using automated credit scoring systems for underwriting more and more credit products. These systems, used for many years for credit card underwriting, are also now being used by lenders making home mortgage, home improvement, and even business loan underwriting decisions. Credit scoring systems hold out the promise of promoting fairer lending practices because they purport to use objective, mathematical models for identifying and measuring those factors that demonstratively predict credit performance in place of discretionary decision-making that can be infected by bias and discrimination. Those who develop and use credit scoring models should take care to determine whether individual credit scoring factors or the overall systems have a disparate adverse impact on minority and other borrowers in protected classes and, if they do, whether other factors or formulations with lesser impact can be used with similar capability to predict creditworthiness.

There may be nondiscriminatory reasons for overriding credit scores. For example, a bank may choose not to make another loan to a borrower who previously defaulted on a loan with the bank, even though a passing credit score indicates that the borrower does not currently pose a greater risk of default than other borrowers to whom the bank is lending. However, lenders must be careful in allowing overrides. Where disproportionate numbers of white applicants are approved for credit despite a failing credit score or disproportionate numbers of minorities are denied credit even with a passing credit score, there is a concern that discrimination may be at work. The concern is heightened when a lender is not documenting the reasons for the overrides or has a large number where no specific rationale is given for an override decision.

Our enforcement efforts in the area of credit scoring have not yet focused on disparate impact issues, but rather on the misuse of credit scoring systems. Last year, we filed a complaint and $3 million settlement agreement in federal court in Jackson, Mississippi resolving our allegations that Deposit Guaranty National Bank (DGNB), the largest such institution in the state, had engaged in a pattern or practice of racial discrimination in the underwriting of credit-scored home improvement loan applications in Mississippi, Arkansas, and Louisiana. We alleged that the lender allowed individual branch loan officers to "override" automated underwriting decisions to reject applicants who had a "passing" score and to approve applicants for loans who had a "failing" score. The criteria for making such decisions were inconsistently applied, and there was inadequate monitoring of those decisions. African-American applicants were more than three times as likely to be rejected as similarly situated white applicants.

Under the terms of the settlement, an estimated 250 African-American applicants, whose applications for home improvement loans were evaluated under the flawed underwriting system, will share in a $3 million fund. In addition, loan applications will be underwritten under uniform and centralized underwriting policies and procedures, all applications initially recommended for rejection will receive a second level of review by senior underwriting officials, decisions to override the result indicated by a credit score can be made only by a small number of bank officials, and there will be frequent reviews and analyses of all underwriting decisions in order to ensure their consistency with fair lending requirements. United States v. Deposit Guaranty National Bank, Case No. 3:99CV670 (S.D. Miss. 1999).

Also in 1999, we filed a lawsuit in Wilmington, Delaware, charging Associates National Bank, a consumer credit card bank headquartered in Wilmington, with violating the Equal Credit Opportunity Act by intentionally subjecting Spanish-language credit card applicants and cardholders to stricter underwriting standards and less favorable terms and conditions than those applied to non-Hispanic individuals. In this case, we alleged that individuals who filled out the Spanish-language applications were evaluated through a credit scoring system that had stricter standards than the scoring system used for English-language applicants. On January 8, 2001, we filed with the court a settlement agreement under which ANB will establish a $1.5 million compensation fund to provide damages to hundreds of Hispanic applicants who faced stricter underwriting standards and less favorable credit terms and conditions than those who applied in English between late February 1996 and April 1997.

United States v. Associates National Bank, Civil Action No. 99 196 (D. Del. 1999).

We hope that the DGNB and Associates National Bank settlements will serve as a warning to the credit industry that, for all of their potential to make underwriting decisions more objective and fair, credit scoring systems must be administered in a nondiscriminatory manner.

Pricing Discrimination

We have brought several suits challenging discrimination in the price of credit. In the mortgage lending area, pricing disparities often arise as a result of discriminatory application of "overages," that is, the discretionary authority of employees or brokers to charge rates higher than the lender's set rates, for which the employees receive additional compensation. It should be emphasized that the higher prices resulting from overages are not related, in any way, to the qualifications of the borrower or the risk to the lender. The use of an employee or broker incentive program such as an overage system is not unlawful per se, but it becomes unlawful if applied in a manner to extract higher prices from minorities or women because of their race, national origin or gender.

The "overage" issue was involved in a lawsuit filed by our Department against the Huntington Mortgage Company in Cleveland in 1995, in a lawsuit filed in 1996 against the Fleet Mortgage Company in Brooklyn, and in a suit filed in 1996 against Long Beach Mortgage Company in California. In the Huntington and Fleet cases, we alleged that mortgage company employee loan officers were charging African-American and/or Hispanic borrowers higher up-front fees for home mortgage loans than they were charging to similarly situated white borrowers, and that these differences in price could not have occurred by chance and could not be explained by differences in the borrowers' loan qualifications. United States v. The Huntington Mortgage Company, Case No. 1:95 CV 2211 (N.D. Ohio 1995); United States v. Fleet Mortgage Corp., Case No. CV 96 2279 (E.D.N.Y. 1996).

In the Long Beach case, we alleged that the company had allowed both its employee loan officers and its independent loan brokers the discretion to charge borrowers up to 12% of the loan amount above the lender's base price. Our analysis of interest rates, fees, and points showed that the lender discriminated on the basis of race, national origin, sex, and age. Younger white male borrowers got the lowest rates, and older, African-American, single women fared the worst. White females, African-American males and Hispanics fell somewhere in between. The discrimination was evident with loans made by Long Beach's own officials, but was even more marked with loans that came through some of its mortgage brokers. Because Long Beach ultimately was responsible for underwriting all of the loans and allowed the brokers to charge the discriminatory prices, we asserted that Long Beach was liable, not only for the alleged discrimination of its own employees, but also for that of the brokers. As a result of the settlement, Long Beach changed its pricing policies, and paid a total of $3 million to 1,200 borrowers who had paid higher prices. United States v. Long Beach Mortgage Company, Case No. CV-96-6159DT(CWx) (C.D. Cal. 1996).

In consumer lending, we alleged that African-American applicants were charged higher interest rates than their white counterparts by the First National Bank of Vicksburg in Mississippi, and we filed suit to end this practice. United States v. First National Bank of Vicksburg, Case No. 5:94 CV 6 (B)(N) (S.D. Miss. 1994). In a case against Security State Bank of Pecos, Texas, a review of the consumer loan records by Federal Reserve Board examiners found that Hispanics were being charged higher interest rates -- from three to five percentage points -- for both secured and unsecured consumer loans than the prices charged to white Anglos, and that the differences were not supported by business reasons. United States v. Security State Bank of Pecos, Case No. SA95CA0996 (W.D. Tex. 1995). Another suit alleged that Native Americans were charged higher interest rates than their white counterparts by Bank of Gordon, a Nebraska bank. United States v. First National Bank of Gordon, Civil Action No. 96-5035 (D.S.D. 1996). The relief we obtained in these cases includes compensation funds for victims of discrimination by the banks, education programs for both bank employees and borrowers, recruitment of minorities for positions at the bank, and self-testing to monitor compliance with the fair lending laws.

We also addressed the issue of "overages" in an amicus curiae brief the Department of Justice filed in a private suit against Nissan Motor Acceptance Corporation (NMAC). In that case, plaintiffs allege that NMAC's practice of permitting auto dealers, at their discretion, to set finance charges independent of risk has resulted in African Americans paying higher finance charges. Plaintiffs further allege that these higher charges cannot be explained by non-discriminatory factors. In our amicus brief, we argued that a lender has a non-delegable duty to comply with ECOA, and, thus, is liable under ECOA for discriminatory pricing in loans that it approves and funds. Brief of the United States as Amicus Curiae in Support of Plaintiffs' Opposition to Defendant's Motion for Summary Judgment, Cason v. Nissan Motor Acceptance Corp., No. 3-98-0223 (M.D. Tenn. Aug. 1, 2000). The court issued a preliminary ruling favoring this position, but the case is still in litigation.

Predatory Lending

All three issues (marketing, underwriting, and pricing) can come into play where predatory lending is involved. Much attention has been focused on predatory lending in recent years, with government agencies, consumer groups, and responsible industry representatives alike condemning lending practices that exploit vulnerable borrowers. It is important to understand that predatory lending represents only a subset of subprime lending. It is equally important to recognize that responsible subprime lending serves an important role in the economy by providing access to credit at higher prices to borrowers whose past credit performance or current debt and income status make them higher risks for lenders.

The overall increase in home mortgage lending in recent years is attributable in part to a dramatic increase in subprime lending. For example, a recent HUD study found that, from 1993 to 1998, the number of subprime refinancing loans increased ten-fold. U.S. Department of Housing and Urban Development, Unequal Burden: Income and Racial Disparities in Subprime Lending in America (April 2000). What is troubling about this increase from a fair lending standpoint is that minorities are disproportionately subprime borrowers. Studies conducted by HUD, Fannie Mae, Freddie Mac and others show that minority borrowers, especially in urban areas, are disproportionately represented in the subprime market. Subprime loans are three times more likely to be made in low-income neighborhoods than high-income neighborhoods, and five times more likely in African-American neighborhoods than in white neighborhoods. In predominantly African-American neighborhoods, subprime lending accounted for 51% of home loans in 1998, compared with only 9% in predominantly white areas.

These differences hold regardless of income level. In comparing rates in low-income neighborhoods, the HUD study reported that 54% of African-American borrowers, but only 18% of white borrowers, obtained subprime loans. For moderate-income neighborhoods, the figures were 44% for African Americans and 10% for whites. In upper-income neighborhoods, the figures were 39% for African Americans and 6% for whites. HUD, Unequal Burden: Income and Racial Disparities in Subprime Lending in America (April 2000).

While the availability of subprime loans is essential to borrowers with flawed credit, a recent Freddie Mac study found that 10-35% of subprime borrowers actually could qualify for prime or "A" credit. (Freddie Mac analysis, relying on sample of 15,000 subprime mortgages originated by four financial institutions - - 1996 unpublished draft report). Indeed, some subprime lenders, in seeking to attract investors, stress that many of their borrowers have "A" level credit (or just slightly below). These figures suggest that conventional lenders are either not fairly serving minority communities and are engaged in redlining or marketing discrimination, or that they are not fairly underwriting loan applications from minorities.

While the figures showing the disproportionate rates of subprime lending to minorities are stark, the differences might be even more alarming if we were able to isolate predatory lending from the rest of the subprime market. In many of the central city minority residential areas in the country, there has been an increase in abusive and harmful lending practices, many of which have resulted in consumers' losing much of the equity value in their homes, or even the homes themselves. These practices, commonly described as "predatory lending," do not involve discriminatory access to credit, but, ironically, too much easy access to high-cost credit.

One of our principal concerns is that lenders have targeted vulnerable populations (often minorities and the elderly, particularly women) who have owned their homes for a long time and thus have built up equity. Such individuals may have short-term debt (on credit cards, for example) or may have their current first mortgage with a finance company or another subprime lender. Some lenders use high-pressure or deceptive sales methods to persuade these borrowers that debt consolidation or refinancing a mortgage is advantageous when it actually means lengthening the term of a mortgage and diminishing the amount of equity the borrower has, a result that is rarely in that individual's long-term financial interest. Some particularly unscrupulous lenders may urge borrowers to default on existing loans, thus putting them at risk of foreclosure and making them even more desperate to obtain a loan on any terms. They may also convince persons with inconsequential credit flaws that they cannot obtain loans from banks. Some lenders bury the legally required disclosures of loan terms in a blizzard of paper that borrowers do not understand, and thus a borrower may not realize that the terms are disadvantageous compared to those that might be available from a more responsible lender. Some lenders charge exorbitant interest rates, points and fees that are not related to the level of risk. They induce borrowers to add on expensive additional products (such as credit life insurance financed by the loan proceeds), which further reduce the borrowers' equity. Some make loans to borrowers whose income level is insufficient to meet the new debt obligations; these loans will inevitably lead to foreclosure or another refinancing transaction that takes even more equity. Recent studies done in New York and Chicago show a substantial surge in the number of mortgage loan foreclosures, disproportionately in subprime loans. U.S. Department of Housing and Urban Development, Office of Policy Development and Research, Unequal Burden in New York: Income and Racial Disparities in Subprime Lending (May 2000); Unequal Burden in Chicago: Income and Racial Disparities in Subprime Lending (May 2000).

Predatory lending practices sometimes violate the fair lending laws, sometimes violate state and federal consumer protection laws, and sometimes violate both. We have joined forces with other federal and state law enforcement agencies to deal with these issues. In March 2000, the Department of Justice, along with the Secretary of the Department of Housing and Urban Development and the Federal Trade Commission, filed suit against Delta Funding Corporation, a subprime mortgage lender operating mainly in minority areas of Brooklyn and Queens. The complaint alleged that Delta violated fair lending and consumer protection laws by underwriting and funding home mortgage loans with higher mortgage broker fees for African-American females than for similarly situated white males, paying kickbacks to brokers to induce them to refer loan applicants to Delta, and approving loans without regard to the borrower's ability to repay. The government alleged that Delta's actions put borrowers thousands of dollars in debt and exposed them to unwarranted risk of default or foreclosure. A number of the victims identified by the Justice Department were African-American widows living in Brooklyn who had little or no outstanding mortgage debt and who were persuaded to obtain high-priced refinance loans they could not afford. United States v. Delta Funding Corp., Case No. CV 00 1872 (E.D.N.Y. 2000).

In January 1998, the Federal Trade Commission filed an action against Capital City Mortgage Corporation, a lender in the District of Columbia, charging it with a variety of unfair practices. Most of the lender's borrowers are African-American, and a companion private suit alleged that the company targeted minority borrowers for predatory loans that very often led to default. We filed an amicus brief supporting plaintiffs' argument that "reverse redlining," that is, targeting minority neighborhoods for predatory loans that are designed to fail, can violate the Fair Housing Act and the Equal Credit Opportunity Act. Brief of the United States as Amicus Curiae in Support of Plaintiffs' Opposition to Defendants' Motion for Judgment on the Pleadings or, in the Alternative, for Summary Judgment, Hargraves v. Capital City Mortgage Corp., Civil Action No. 98-1021 (JHG/AK) (D.D.C. March 10, 2000). In a preliminary ruling, the court agreed that such conduct could violate the law. Memorandum Opinion and Order (Sept. 29, 2000). The case is still in litigation.

Business Lending

Just as the availability of credit to purchase, refinance, and improve our homes is critical to the well-being of local communities, so is the availability of credit for small businesses. Lack of access to capital has been one of the most formidable barriers to the formation and development of minority businesses. Studies and reports have shown that African-American owned firms are more than twice as likely to have a loan application rejected as white-owned firms (65.9% versus 26.9%). The loan denial rates for African Americans remain significantly higher than those for whites, even after taking into account differences in an extensive array of measures of credit-worthiness and other characteristics. When African-American owned firms are approved for loans, they pay rates of interest that are approximately one percentage point higher than white-owned firms, even after controlling for differences in credit-worthiness. David G. Blanchflower, Phillip B. Levine & David J. Zimmerman, Discrimination in the Small Business Credit Market (National Bureau of Econ. Research Working Paper No. 6840, 1998). The Justice Department is exploring ways that we can effectively confront discrimination in this area.

Lenders are prohibited by regulation from inquiring about the race, color, sex, religion, or national origin of applicants for business loans and other types of non-mortgage loans. The intent of this rule (Regulation B, promulgated by the Federal Reserve Board to implement ECOA) was to prohibit the discriminatory use of such data -- and that intent was laudatory. But we now know from our experience with home mortgage data that this data is critical to our successful fair lending enforcement program. Regulation B expressly allows lenders to collect, and indeed, most lenders are required to collect, such data for home mortgage loans. Requiring banks to collect this data has not led to the discriminatory or improper use of the information. Just the opposite is true. We have been able to use this data in numerous lawsuits to combat discrimination.

Changing Regulation B to permit creditors to collect such information would allow institutions to monitor their own performance and give regulators the tools needed to identify problems and work to solve them. The lenders' front-line employees know the race, ethnicity, and sex of loan applicants, and it is time for those who review their behavior to know also. The Department of Justice, and several other agencies, including the Treasury Department, the Comptroller of the Currency, the Office of Thrift Supervision, and the Small Business Administration, have urged the Federal Reserve to make this change.

There has been heartening progress in the access of all of our citizens to credit. While the growing economy has boosted homeownership rates overall, some commentators have credited the large increase in mortgage lending to minorities in recent years, at least in part, to an increased level of scrutiny, through both litigation and regulatory enforcement, in the area. John R. Wilke, Realizing the Dream of Home Ownership: Blacks, Hispanics Suddenly Find it Easier to Secure Home Mortgages, S.D. Union-Tribune, March 24, 1996, at H1; Kenneth H. Bacon, Reaching Out: Under Strong Pressure, Banks Expand Loans for Inner-City Homes, Wall St. J., Feb. 23, 1994, at A1. In carrying out our law enforcement responsibilities, we have never asked a lender to make a bad loan. We have simply required that opportunities be equally available to all and that people be treated equally -- without regard to race, national origin, or any other prohibited factor. We have also encouraged lending institutions to review their own policies and practices to eliminate unfairness and to promote lending decisions truly based on creditworthiness and risk. In addition to bringing fair lending enforcement actions, the Department of Justice has devoted staff time, energy, and resources, to speak about the important issues of fair lending with industry representatives and individual lenders at conferences, seminars, and training programs. We have been encouraged in these conversations by many in the lending industry who are committed to insuring that their services and products are fairly available to all. But the job of insuring fair access to credit is far from finished. Continued strong enforcement efforts are necessary to insure equal opportunity in home mortgage consumer, and small business lending. We also hope that more and more lenders will learn that reaching out to all potential customers and treating them fairly is not only required by law; it can also be highly profitable; and it is absolutely essential to strengthening our communities, our economy, and our nation.