This bulletin applies to all community banks./1
* transmits the inter-agency statement, which
* reminds creditors, including those who are banks, of the possibility under the ECOA and Regulation B to establish SPCPs to meet the credit needs of specified categories of persons.
* draws attention to recent HUD guidance concluding that CPCPs instituted pursuant to the ECOA and Regulation B generally do not violate the Fair Housing Act./2
*provides additional information on SPCPs under ECOA and Regulation B.
* deals with the role of the agency in terms of SPCP.
Additional Information on Special Purpose Credit Programs under ECOA and Regulation B, and recent guidance from HUD
ECOA and Regulation B
The ECOA provides that “[i]It is unlawful for any creditor to discriminate against any applicant, with respect to any aspect of a credit transaction” on a prohibited basis./3
The bases prohibited by the ECOA are race, color, religion, national origin, sex, marital status, age (provided the applicant has the capacity to contract), because any or part of the Applicant’s income is from any government assistance program and because the Applicant has exercised in good faith any right under the Consumer Credit Protection Act.
The ECOA provides, however, that the prohibitions of discrimination are not violated where a for-profit creditor refuses to extend credit offered under an SPCP that meets the standards of Regulation B./4
For example, these programs may include initiatives for low-income minority borrowers or small business loan programs that provide credit to minority-owned or disabled-owned businesses./5
In addition, the advisory clarifies the type of research and data that may be appropriate to inform a for-profit organization’s decision to establish a SPCP for the benefit of a specific category of people and provides examples./ 7
Recent HUD Orientation
The legal opinion concludes that a for-profit institution’s SPCP designed and implemented in accordance with the ECOA and Regulation B generally does not violate fair housing law.
Quoting the HUDs
The FHEO press release provides that “[s]such programs, if constructed in a thoughtful manner and in accordance with
The oversight role of the OCC regarding SPCPs
The OCC and other agencies that oversee and enforce the ECOA and Regulation B do not determine whether a program qualifies for SPCP status or whether a particular program benefits an “economically disadvantaged class of persons.” The long-standing official staff commentary on Rule B provides that such determinations must be made by a creditor./12
The OCC has a long-standing practice of consulting with its regulated institutions that are considering introducing CPPS. Although not mandatory, these consultations can allow banks to benefit from the point of view of OCC experts familiar with other SPCPs. In addition, these consultations benefit the OCC by giving it a broader perspective on the populations and the credit products or services that are the subject of the proposed SPCP./13
Principal Assistant Controller for Banking Supervision Policy
* “Interagency Statement on Special Purpose Credit Programs under the Equal Credit Opportunity Act and Regulation B” (PDF) (https://www.occ.gov/news-issuances /bulletins/2022/bulletin-2022-3a.pdf)
* * *
1/ “Banks” means collectively National Banks, Federal Savings Associations, Covered Savings Associations and Federal Branches and Agencies of Foreign Banking Organizations.
2/ Refer to the HUD “
3/ See 15
4/ See 15
5/ See 12 CFR 1002.8, Supplement I, Commentary 8(a)-5; Equal Credit Opportunity (Regulation B); Special Purpose Credit Programs, 86 Fed. Reg. 3762, 3765 (
6/ See 86 Fed. Reg. at 3762, 3764-65 (
7/ See 86 Fed. Reg. at 3765-66.
8/ Refer to the HUD “
9/ Refer to “FHEO’s Statement by
12/ Refer to
13/ For example, OCC Newsletter 2003-8, “Financing Minority Businesses”, provides information on ways in which banks can meet the financing needs of minority-owned entrepreneurs in accordance with safe and sound banking practices, describes appropriate lending risk mitigation practices, makes reference to the availability of SPCPs, and states that the OCC encourages banks considering SPCPs to discuss their plans with their examiners.