We have discussed previously some of the limitations of regression analysis and the importance of an appropriate sample. In today’s post we delve a little deeper into these issues and provide a broader perspective to amplify these points.
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Historically, business lending has not been the focus of fair lending reviews during bank examinations. The focus is usually on HMDA reportable applications since government monitoring information (GMI) is available and, therefore, protected and non-protected classes status is readily identifiable. How is that changing today?
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Evaluating redlining risk can take a number of forms and methods. In a recent webinar by the FDIC, the agency reaffirmed and provided more detail about a bank’s “REMA”, or Reasonably Expected Market Area.
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Commercial banks are required under the Community Reinvestment Act (CRA) to serve all segments of the communities in which they operate. This includes making loans to areas and individuals of all income levels, and particularly low and moderate income communities and persons.
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The FDIC held a meeting of the Advisory Committee on Community Banking on Wednesday, July 12.
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A question that often arises in fair lending regression analysis of lender loan decisioning practices is how special case loans are handled.
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A fundamental assumption in fair lending regression analysis is that the model is correctly specified and contains all the relevant variables.
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Regression analysis is a powerful tool for assessing fair lending risk and performance. As is the case with any tool, however, it must be understood and used correctly. This includes understanding the limitations which in turn defines what conclusions can be drawn from an analysis.
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When preparing to conduct a fair lending regression analysis, the first step is to determine the loan sample to be analyzed. This is usually accomplished by first selecting a particular loan product on which to focus and a time period.
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The Fed has increased interest rates 3 times now since December of 2015 resulting in an increase in the Fed Funds Rate of 75 basis points. As rates have been low for a long period of time, the spread between a bank’s cost of funds and the interest rates charged on loans has been […]
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