Oak
Hill Banks
April
20, 2004
Dear Sir or Madam,
As a community
banker and a consumer, I can see both the need and burden that
consumer regulations have on both the banking industry and consumers
in general and I welcome any review of these regulations to streamline
the system. In my professional career as a banker for over 20 years,
I have tried my best to be fair, honest, and consistent with any
existing or potential customers. In general, I have tried to look
out for the best interests of my customers in all my dealings and
believe that if you treat people well you will be rewarded with
loyal, long term customers. I do however recognize that not all
people in financial institutions treat their customers the same
way or there is at least the potential for abuse. Therefore, consumer
regulations are a necessary evil to insure that all people are
treated fairly. Although there are a number of minor issues I would
like changed, I will concentrate my comments to one area in particular
that I believe needs to be changed.
I believe the
monitoring information collected on all consumer real estate applications
to determine sex and race is being unfairly used to report potential
abuses in lending to minorities. Every time this information is
released, the media and consumer groups point to the information
as evidence that financial institutions perform unfair lending
practices to minorities. However, this is impossible to determine
unless a person knows the reason for a decline. Since the information
provided is only the race and sex, it is impossible to honestly
state that a person is being discriminated against. Many factors
go into whether somebody is turned down for a loan including income,
credit history, debt/income ratios, etc. Instead of determining
the accurate reason for denials and comparing “apples to
apples”, regulators, politicians, and consumer groups base
their opinion on incomplete data. This not only is bad for financial
institutions’ images but encourages those that believe financial
institutions in general are discriminating against minorities.
Regulators already review our denials when they examine the bank
to determine if we are following consumer regulations.
I am not in favor
of additional regulation but perhaps a solution to this would be
to provide the denial letter with the information collected for
race and sex. If a pattern is established, the bank examiners could
exam those loans to see how they compare to similar loans that
have been approved. Even if more loans to a particular minority
are turned down for the same reason than another group, it doesn’t
necessarily mean they are being discriminated. The files need to
be reviewed to see if the reason(s) for the denial were legitimate.
If they are then that needs to be stated to the general public.
Namely, the governmental agency reviewed the files and found the
financial institution was not discriminating. If they are discriminating
then that needs to be stated to the public as well. Unfortunately,
in this day and age, there is not as much effort to announce compliance
with laws then it is to blame a financial institution for non compliance.
Thank you for
considering my comments.
Sincerely,
Roger P. Mersch
AVP/ Credit Administration Officer
Oak Hill Banks
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