Equal Credit Opportunity Act:

OCC Should Further Review First Chicago's Screening Test for Credit Card Holders

GGD-92-4: Published: Dec 12, 1991. Publicly Released: Dec 23, 1991.

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James L. Bothwell
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Pursuant to a congressional request, GAO evaluated a bank's test of credit card accounts in the Northeast to determine whether it could reduce losses by reviewing credit card accounts earlier than its normal 2-year cycle, focusing on whether the test was discriminatory.

GAO found that: (1) the Office of the Comptroller of the Currency (OCC) concluded that the bank's credit screening process was not discriminatory as defined by the Equal Credit Opportunity Act (ECOA), since it did not include such prohibited characteristics as race, sex, or marital status; (2) the bank's bankruptcy data were, for the most part, consistent with its decision to review credit card holders in the Northeast; (3) although GAO did not believe that the bank's test discriminated against Northeast credit card holders under ECOA, the credit screening procedures could still violate the act if they had the effect of discriminating against those protected by ECOA; (4) the 1989 OCC evaluation did not closely examine the bank's credit practices; (5) OCC examiners essentially limited their review of credit practices to consumers whose credit card applications were rejected; and (6) OCC examiners did not obtain sufficient information to determine whether the bank's test had the effect of discriminating against cardholders whose credit was reduced or cancelled.

Recommendation for Executive Action

  1. Status: Closed - Implemented

    Comments: The OCC compliance examination is completed. This examination tested for "in effect" discrimination against First Chicago's Northeast credit card holders. No evidence of discrimination was found.

    Recommendation: The Comptroller of the Currency should direct the national bank examination staff, as part of its planned 1992 compliance examination, to review First Chicago's credit card operations to better ensure that the Northeast test did not in effect violate ECOA.

    Agency Affected: Department of the Treasury: Office of the Comptroller of the Currency


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