“Community banks are fully committed to fair lending and strongly oppose discrimination prohibited under laws such as the Fair Housing Act and Equal Credit Opportunity Act,” Cameron Fine, ICBA president and CEO, said. “However, community banks are experiencing enforcement overreach that diverts an abundance of resources from serving their local communities to complying with and responding to unwarranted fair lending allegations.”
Community banks support the use of consistent and transparent standards to regulate evaluate lending practices, but groundless claims, prolonged enforcement actions, and unnecessary litigation hurt community banks and their customers, ICBA said. It also undermines the availability of credit in local communities.
In its statement, ICBA mentioned what it calls a baseless claim by the Justice Department against 110-year old, family-owned KleinBank, that has never been cited for fair lending violations. The Justice Department penalized the bank for not marketing to or having branch offices in nearby Minneapolis or St. Paul, Minnesota. Requiring community banks to expand their market presence would, in effect, cause them to alter their business models. This type of action attacks the community banking model, whereby they serve their local communities and are not forced to expand their market presence into neighboring cities and counties.
ICBA represents nearly 6,000 community banks of all sizes and charters in the United States.