Federal Reserve Board examiners are finally taking a peek at the subprime lending activities of consumer finance companies and mortgage banking companies that are owned by bank holding companies.These holding company affiliates originate 43% of all subprime loans, Fed Governor Edward Gramlich told the annual housing policy meeting of the Financial Services Roundtable in Chicago. Commercial banks and thrifts originate 40.8% of subprime loans. "As umbrella supervisor of financial holding companies, the Fed is instituting new procedures for monitoring the lending practices of affiliates of these holding companies, which are responsible for an important share of subprime mortgage lending," Mr. Gramlich said. The Fed issued a supervisory letter (03-22) late last year --and revised it on Jan. 8 -- that outlined new consumer compliance examinations for BHCs. A Fed spokesman said the new compliance examinations are now taking place.

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