Challenges and FDIC Efforts Related to Predatory Lending –

June 2006
Audit Report No. 06-011

Footnote 1:  FDIC Banking Review, 2005, Volume 17, No. 1, Limited-Purpose Banks: Their Specialties, Performance, and Prospects.

Footnote 2:  FILs may announce new regulations, special alerts concerning entities operating illegally as financial institutions, new FDIC publications, or a variety of other matters.

Footnote 3:  The FDIC’s subprime lending and payday lending guidance also provides information on the FDIC’s expectations for prudent risk-management practices for those lending activities. At the time the FDIC released its payday lending guidance in March 2005, the Corporation reported that 12 FDIC-supervised institutions were engaging in payday lending.

Footnote 4:  The FFIEC, which consists of all federal financial institution regulatory agencies, is a formal interagency body empowered to prescribe uniform principles, standards, and report forms for the federal examination of financial institutions by the FDIC, OTS, OCC, FRB, and National Credit Union Administration (NCUA). The FFIEC makes recommendations to promote uniformity in the supervision of financial institutions. The scope of our audit did not include the NCUA.

Footnote 5:  The following agencies also participated in the issuance of the consumer brochure: HUD, Department of Justice, Federal Housing Finance Board, FTC, and Office of Federal Housing Enterprise Oversight.

Footnote 6:  On July 19, 2005, the federal banking agencies approved CRA final rules, effective September 1, 2005. Those rules include clarification on when discrimination or other illegal credit practices by a bank or its affiliate will adversely affect an evaluation of the bank's CRA performance.

Footnote 7:  We coordinated meetings with FRB and FTC program officials through their respective Offices of Inspector General. Our contact with HUD, OCC, and OTS was limited to meetings with their OIG officials and review of information obtained from their agency Web sites.

Footnote 8:  Effective June 30, 2002, the FDIC’s Division of Supervision and Division of Compliance and Consumer Affairs merged to form the new DSC.

Footnote 9:  In addition to reforming the financial services industry, GLBA addressed concerns relating to consumer financial privacy. Title V of the GLBA established major privacy provisions under Subtitles A and B. Subtitle A provides a mechanism to protect the confidentiality of a consumer’s nonpublic personal information. Subtitle B prohibits “pretext calling,” which is a deceptive practice used to obtain information on the financial assets of consumers. Criminal penalties and regulatory and administrative enforcement mechanisms are established to help prevent this practice.

Footnote 10:  A title loan is a short-term consumer loan made to an individual secured by clear title to the borrower’s vehicle. Payday loans are small-dollar, short-term loans that borrowers promise to repay out of their next paycheck.

Last updated 06/14/2006