Reg B Change Creates Self-Test
The Federal Reserve Board recently approved a final rule amending Regulation B, which implements the Equal Credit Opportunity Act (ECOA). The final rule addresses the collection of applicants' personal characteristics in connection with non-mortgage credit and with record retention for prescreened solicitations.
The final rule will become effective April 15, 2003. However, to allow time for necessary operational changes, the mandatory compliance date is April 15, 2004.
The ECOA prohibits discrimination on the basis of a credit applicant's national origin, marital status, religion, color, sex, race, age, receipt of public assistance benefits, or the exercise of rights under the Consumer Credit Protection Act. The existing prohibition is meant to deter credit discrimination, but it also prevents creditors from examining their own lending practices by using information about applicant characteristics.
The new ruling creates an exception that will allow creditors to collect personal characteristics in a self-test for compliance. This will enable creditors to develop compliance programs that use applicant data in a controlled and targeted manner.
The final rule also requires creditors to keep certain records related to prescreened solicitations, such as the list of criteria used to select potential customers, for 25 months.
The Board also amended the official staff commentary to Regulation B that gives guidance on the requirements of the regulation.
For more information, visit www.federalreserve.gov/boarddocs/press/bcreg/2003/
Bridges is a regular review of regional community and economic development issues. Views expressed are not necessarily those of the St. Louis Fed or Federal Reserve System.
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