1 The Examiner’s Role in Developing the Fair Lending Case Debra Pearlman, FLEX JoAnna Gekas, Counsel

Future Discovery Issues Don’t mark Don’t mark documents collected Examiner documents Examiner documents may be discoverable may be discoverable (including s!) (including s!) 2

3 Legal Involvement in Fair Lending Reviews Determine whether additional investigation is necessary  Informal investigation  Formal investigation

4 Legal Involvement: Informal Investigation Informal Investigation includes: Informal Investigation includes: – Information and documents gathered during examination – Contacting third parties without a subpoena and seeking information or documents – Internet and other research

5 Informal Investigation Advantages Advantages – Gather evidence quickly – Third party more cooperative – Prepare for formal investigation Disadvantages Disadvantages – No formal testimony – Unable to obtain documents – Potential evidentiary issues without subpoena

Purpose of Formal Investigations To compel testimony or the production of documents To compel testimony or the production of documents 6

What Constitutes Evidence? Report of Examination Report of Examination Workpapers that are prepared as part of the examination, including notes of interviews conducted with bank staff Workpapers that are prepared as part of the examination, including notes of interviews conducted with bank staff Other questionnaires Other questionnaires Your own testimony Your own testimony 7

Evidence Direct vs. Circumstantial Evidence 8

Intra-agency Appeals Process Appeal and Filing with the Supervision Appeals Committee (SARC): Appeal and Filing with the Supervision Appeals Committee (SARC): Two-Part Process 9

Material Supervisory Determinations Determinations Subject to Appeal Determinations Subject to Appeal – CRA Ratings – Consumer Compliance Ratings – Violations of a Statute or Regulation – Truth in Lending Restitution Good Faith Resolution Good Faith Resolution Burden of Proof Burden of Proof 10

Referrals To DOJ Pattern or Practice Pattern or Practice Statute of Limitations Statute of Limitations Tolling Agreements Tolling Agreements 11

Litigation Process

Enforcement Process Roles “Starring actor” in the enforcement “Starring actor” in the enforcement process: EXAMINER Director of how to present to the judge: The Enforcement Counsel Director of how to present to the judge: The Enforcement Counsel 13

Examiner’s Role Assists with producing and reviewing documents Assists with producing and reviewing documents Is the “sponsoring” witness Is the “sponsoring” witness Provides expert opinions Provides expert opinions Assists counsel at hearing Assists counsel at hearing 14

15 Summary Now you can:  Recognize formal/informal enforcement actions  Identify potential fair lending (FL) concerns  Use effective interview techniques, and appropriately document findings  Recognize the importance of Legal’s involvement in fair lending reviews  Determine the type of evidence needed to support a FL violation  Discuss your role in the enforcement process