Letter to The Hon. Richard Delmar, Acting Inspector General of U.S. Department of Treasury - Warren, Brown and Cortez Masto Urge Treasury Department Inspector General to Investigate Reports that Occ Officials Shelved Investigations of Banks Engaging in Discriminatory Lending Practices and Redlining

Letter

Dear Acting Inspector General Delmar:
I write regarding recent reports that senior Office of the Comptroller of the Currency (OCC)
officials "quietly shelved at least six investigations of discrimination and redlining" in spite of
staff recommendations that the agency impose fines and penalties.
1
I urge you to launch an
investigation of these extremely concerning reports and of OCC's enforcement of the Equal
Credit Opportunity Act (ECOA), the Fair Housing Act (FHA), and other fair lending laws.
The OCC is one of the agencies responsible for ensuring that banks comply with important fair
lending laws and regulations -- including ECOA and FHA -- created to safeguard equitable access
to credit and housing. In accordance with this responsibility, the agency has the authority to
perform fair lending examinations and bring public enforcement actions, seek civil money
penalties, and require that banks provide relief to victims when they violate those laws and
regulations.
2
However, recent reports indicate that senior OCC officials have abdicated their responsibilities --
allowing banks to continue business as usual despite alleged violations of ECOA and FHA. In
fact, a former OCC employee described the agency's recent approach as "outright hostile" to
consumers' interests -- suggesting a pattern of neglect on the part of the agency's leadership.
3
This conduct stands in stark contrast to the OCC's requirement to enforce the law, its finding that
lending discrimination is "destructive, morally repugnant, and against the law," and its
commitment to not "tolerate lending discrimination in any form."
4
According to the ProPublica report, over the last three years, OCC staff discovered at least six
banks were allegedly engaging in discriminatory lending practices, but none were penalized or

1 ProPublica, "Trump Financial Regulator Quietly Shelved Discrimination Probes Into Bank of America and Other
Lenders," Patrick Rucker, July 13, 2020, https://www.propublica.org/article/trump-financial-regulator-quietlyshelved-discrimination-probes-into-bank-of-america-and-other-lenders.
2 12 U.S.C. § 1818
3
ProPublica, "Trump Financial Regulator Quietly Shelved Discrimination Probes Into Bank of America and Other
Lenders," Patrick Rucker, July 13, 2020, https://www.propublica.org/article/trump-financial-regulator-quietlyshelved-discrimination-probes-into-bank-of-america-and-other-lenders.
4 Federal Deposit Insurance Corporation, "Policy statement on discrimination in lending," accessed on July 22,
2020, https://www.fdic.gov/regulations/laws/rules/5000-3860.html.
even publicly reprimanded. In 2018, examiners discovered that Bank of America was "offering
fewer loans to minority homebuyers in Philadelphia than to white people." However, the
investigation stalled and was ultimately shelved after OCC officials failed to involve "the expert
economists, statisticians and other specialists of the agency's Risk Analysis Division who are
trained to spot patterns of abuse" and brought in new lawyers to the case, an "unusual step" that
can "chill" investigations.5 That same year, examiners found that Cadence Bancorp, a regional
bank operating in several southern states, was "making minority borrowers pass a wealth
threshold that white customers did not have to meet when they borrowed against the equity in
their home." This investigation was verified by the Risk Analysis Division and the agency's
independent ombudsman. However, the OCC appears to have taken no enforcement action
against the bank -- and looks to have simply forwarded its findings to the Department of Justice
(DOJ). A spokesman for the DOJ said, "the department, to date, has taken no action" and that
"[i]t is not unusual that [the DOJ] defer to the financial regulators." 6
It remains unclear if the
OCC or DOJ plan to impose any penalties or take any other enforcement actions.
While the OCC can refer cases to the DOJ and the Department of Housing and Urban
Development, even if these agencies won't act, the OCC also wields important enforcement
authorities that help deter future violations, and ultimately ensure compliance with fair lending
laws and regulations. The agency's failure to engage with its authority puts millions of
consumers at unnecessary and increased risk.
Your office has a mandate to "conduct, supervise, and coordinate audits and investigations
relating to the programs and operations of such establishment."7 Given the recent revelations that
the OCC has failed to fulfill its responsibility to protect consumers from lending discrimination, I
urge you to conduct a thorough investigation into these allegations -- and further ask that your
investigation include an analysis of the following:
1. The processes and procedures in place for OCC staff and officials to launch, conduct, and
complete fair lending investigations -- and how, if at all, these processes and procedures
have changed in the last four years.
2. The extent to which OCC staff and officials are following these processes and
procedures.
3. Whether OCC staff and officials are consistently applying agency protocols and policies,
free of political interference from individuals inside or outside the Administration.
4. The extent to which OCC leadership is appropriately engaging with and considering the
recommendations of staff economists, statisticians, and other specialists who have been
trained to analyze data to detect fair lending violations.

5 ProPublica, "Trump Financial Regulator Quietly Shelved Discrimination Probes Into Bank of America and Other
Lenders," Patrick Rucker, July 13, 2020, https://www.propublica.org/article/trump-financial-regulator-quietlyshelved-discrimination-probes-into-bank-of-america-and-other-lenders.
6
Id.
7 Pub. L. 95--452, § 4
5. Whether OCC is appropriately utilizing its enforcement authorities to bring public
enforcement actions by imposing civil money penalties or requiring responsible parties
provide relief to victims when they violate fair lending laws and regulations, including in
cases which were referred but not taken up by DOJ for a pattern or practice of violations.
Thank you for your attention to this matter.

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