GAO: OCC should use ‘new types of analysis’ when updating redlining exams

New types of analysis when updating redlining examination procedures should be considered by the regulator of national banks when conducting oversight of bank lending practices, the congressional watchdog said in a report Tuesday.

In a report, the Government Accountability Office (GAO) said the Office of the Comptroller of the Currency (OCC) should also establish time frames for carrying out its plan to centrally track information on smaller bank fair lending examination screening, selection, and outcomes and analyze the information on an ongoing basis to help balance examination effectiveness and efficiency given available resources.

The report and recommendations were spurred in a request by three U.S. House members: Joyce Beatty (D-Ohio), Emanuel Cleaver (D-Mo.) and Gregory Meeks (D-N.Y.). Beatty is chair of the diversity and inclusion subcommittee; Cleaver is chair of the housing, community development and insurance subcommittee. Both are subpanels of the House Financial Services Committee. The three House members asked GAO to review OCC’s fair lending oversight activities.

On redlining analysis, GAO said that “as OCC updates its redlining examination procedures, the Comptroller of the Currency should ensure the Compliance Risk Policy Division takes into account the new types of analysis being performed when it documents the steps that the examiners should take as they evaluate whether a bank has potentially engaged in redlining in violation of fair lending laws.”

On centrally tracking information on smaller bank fair lending, the GAO recommended that OCC should ensure that its compliance risk policy division and its office of midsize and community bank supervision establish time frames for carrying out plans to centrally track information on midsize and community bank fair lending examination screening, selection, and outcomes.

“The Compliance Risk Policy Division should use this information to analyze its screening and selection processes on an ongoing basis to ensure an appropriate balance of (1) effective identification of fair lending deficiencies and violations and (2) efficiency given available resources,” GAO recommended.

Fair Lending: Opportunities Exist to Enhance OCC’s Oversight of Banks’ Lending Practices

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