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Each depositor insured to at least $250,000 per insured bank

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4000 - Advisory Opinions

Equal Credit Opportunity Act: Reg. B


November 29, 1989

Valerie J. Best, Senior Attorney

Your letter addressed to the Office of the Comptroller of the Currency concerning an advertisement placed by *** Oklahoma City, has been forwarded to the Legal Division of the Federal Deposit Insurance Corporation. Our records show that *** is a state-chartered nonmember bank insured by the FDIC and therefore subject to oversight by the state of *** and the FDIC rather than the OCC.

You write that an advertisement placed by *** did not display the Fair housing slogan and logo. You also complain that the phrase "home mortgages for professionals and executives" suggests that lending policies of *** are targeted at an exclusive and small segment of the community. You contend that the advertisement disregards the requirements imposed by the Fair Housing Act and Regulation B.

A review of our records indicates that we have not received any complaints to date from individuals who believe that they have been discriminated against by the bank. We have,

however, contacted the *** Regional Office of the FDIC and advised them of your concerns. The *** Regional Office supervises state-chartered nonmember banks in the state of ***.

It is true that FDIC regulations implementing the Fair Housing Act require any bank which engages in any form of advertising of loans for the purpose of purchasing or constructing a dwelling must prominently indicate in such advertisement that the bank makes such loans without regard to race, color, religion, sex, or national origin. One method of complying with this requirement is to display the Equal Housing Lender slogan and logotype.

I do not agree, however, that the reference to professionals and executives, in and of itself, is a violation of Regulation B. The Equal Credit Opportunity Act makes it unlawful for any creditor to discriminate against any applicant with respect to any aspect of a credit transaction on the basis of race, color, religion, national origin, sex or marital status, or age; because all or part of the applicant's income derives from any public assistance program; or because the applicant has exercised any right under the Consumer Credit Protection Act. Regulation B, which implements the Equal Credit Opportunity Act, prohibits a creditor from making any written statement in advertising that would discourage on a prohibited basis a reasonable person from making or pursuing an application. Thus, advertising practices that may be considered as violations of Regulation B include the use of words, phrases, and descriptions that suggest race, color, religion, sex, or national origin. The phrase "home mortgages for professionals and executives" does not appear to fall within these categories.

Likewise, the Fair Housing Act makes it unlawful for any bank to discriminate in residential real estate-related transactions because of race, color, religion, sex, handicap, familial status, or national origin. Regulations of the Department of Housing and Urban Development implementing the Fair Housing Act describe words or phrases that typify those most often used in residential real estate advertising to convey either overt or tacit discriminatory preferences or limitations. HUD regulations do not include the words "professional" or "executives" as being among those that convey discriminatory preferences.

I believe your concern that the advertisement is targeted at an exclusive and small segment of the community goes to compliance with the Community Reinvestment Act. Under the CRA, the FDIC is required, when considering certain applications, to take into account the institution's record of helping to meet the credit needs of its entire community, including low-income and moderate-income neighborhoods. An institution's CRA performance cannot be objectively assessed on the basis of any one source of information, data, or opinion. Rather, a more comprehensive view, over a specific time period, is required. Moreover, a financial institution's responsibility under the CRA may be met in a variety of ways, including lending for business, agriculture, education, consumer, home purchase, and home improvement purposes and to finance state and local governments. The CRA was not intended to limit an institution's discretion to develop the types of products and services that it believes are best suited to its expertise and business objectives and to the needs of its particular community, as long as the institution's program is consistent with the objectives of the CRA.

Thank you for bringing this matter to our attention. Please call me at (202) 898-3812 if you have any questions.

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