The Federal Reserve Board is prepared to examine nonbank subsidiaries of bank holding companies in certain cases where Home Mortgage Disclosure Act data point to possible fair lending violations, according to a Fed official.Although the Fed regulates BHCs, it rarely examines the mortgage banking and consumer finance subsidiaries of holding companies. The Federal Trade Commission has enforcement powers over those entities. But a Federal Reserve Board policy allows for exceptions under special circumstances, according to Fed special counsel Robert Cook. In cases where the HMDA data are "fairly definitive," Mr. Cook said, Fed examiners would approach an institution to seek more information about the disparities that showed up in the subprime loan pricing data. "We would ask what they have done about it and then work out something on whether they will share it with us," Mr. Cook told MortgageWire. In severe cases, "they could go in and do an exam," he said. The Fed special counsel indicated that Fed examiners have approached four or five BHC subsidiaries where the pricing data have raised concerns about disparate treatment of minority borrowers. The Fed can be found on the Web at http://www.federalreserve.gov.

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