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Non-Mortgage Credit Applications Should Remain Race, Gender Neutral, AFSA Testifies

2008-07-17 14:50:00

    Requiring Creditors to Collect this Data Would Raise Concerns

    WASHINGTON, July 17 /EMWNews/ -- Access to affordable

credit will not be enhanced by requiring non-mortgage creditors to collect

race or gender data, testified American Financial Services Association

(AFSA) Executive Vice President for Federal Affairs Bill Himpler in a

hearing held today by the House Financial Services Subcommittee on

Oversight and Investigations.

    "We must be careful not to undo the progress that has been made in

creating a credit granting system that is race and gender neutral," Himpler

told the subcommittee, which was examining the findings of a recent

Government Accountability Office (GAO) report on Regulation B implementing

the Equal Credit Opportunity Act (ECOA). In general, Regulation B prohibits

the collection of race, gender and other demographic data for non-mortgage


    Himpler expressed the association's belief that current regulations

under the ECOA and Regulation B contain the necessary restrictions and

enforcement tools to end discrimination in lending. Today, most

non-mortgage credit is underwritten and priced by creditors using

objective, risk-based credit criteria, without face-to-face interaction or

any information regarding the applicant's race or other prohibited

characteristics, he said.

    "While both the government and the industry have strived to make the

credit application process as colorblind as possible, we believe the

proposed requirement being discussed today goes against this goal," Himpler


    In his testimony, Himpler cited a 2007 Federal Reserve Board study that

concluded credit scores accurately predict credit risk for the population

as a whole and for all major demographic groups. "From our experience with

HMDA reporting, we also know that a mere correlation between race and

pricing, without consideration of detailed credit worthiness factors,

cannot tell us whether illegal discrimination has occurred," he added.

    Himpler also pointed out that the collection and reporting of

non-mortgage data would involve costs that will be passed on to consumers

and significantly increases the risk that a consumer's sensitive personal

information will enter the public domain.

    Based in Washington, D.C., AFSA ( is the national

trade association for the consumer credit industry, protecting access to

credit and consumer choice. Its 350 members include consumer and commercial

finance companies, auto finance/leasing companies, mortgage lenders, credit

card issuers, industrial banks and industry suppliers.

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