Posted on 01/16/2010 1:40:32 PM PST by Defiant
Torrey Pines Bank has entered into a consent agreement with federal regulators after a compliance examination raised concerns over fairness in its credit card applications and other issues.
The consent agreement with the Federal Deposit Insurance Corp. focuses on underwriting practices for its PartnersFirst credit card division, which regulators say discriminates against consumers on the basis of age and gender. The bank strongly disputes that claim.
The agreement also targets the bank’s written policies regarding risk management, including plans for profitability and road maps for reducing its concentration in commercial real estate loans.
The order requires the bank to make improvements over the next few months.
Gary Cady, chief executive of Torrey Pines Bank, called much of the risk-management requirements “boilerplate” provisions for examination reports.
During less contentious political and regulatory times, Torrey Pines’ examination results might not have risen to a level of entering a formal consent order with regulators, Cady said.
“In large part this relates to an issue in our credit card division regarding our application process for credit cards that the FDIC took exception to,” Cady said.
Cady said the regulators objected to multiple-choice questions on the credit card forms that asked applicants to describe themselves. The two categories that raised the most concern were “homemaker” and “retired,” he said. The bank has since changed its credit card applications to address regulators’ concerns. A call to the FDIC was not returned.
The bank entered into the consent order in November. The FDIC made the agreement public Dec. 28 by including it in a news release that listed consent orders issued during the quarter.
Torrey Pines Bank, with about $1 billion in assets, has a large capital cushion and minimal delinquent loans to date. Its total capital ratio of 14.4 percent as of the third quarter exceeds the 10 percent threshold at which the FDIC considers a bank well capitalized.
Although the bank has been growing quickly, it hasn’t made much money so far this fiscal year. Through three quarters, the bank has posted net income of $479,000.
Cady said those results include profits from the bank and losses from the credit card operation. The bank is assessing its options regarding the future of the credit card business, he said. The consent order will not hinder the bank’s ability to make loans, Cady added.
Torrey Pines Bank is owned by Las Vegas-based Western Alliance Bancorp, which also owns banks in Nevada, Arizona and Colorado.
This is NOT the time to force this crap on banks and credit card companies.
People aren’t buying much, which means credit card companies are getting less income in fees from merchants. And many of the people who do have balances on their cards aren’t paying their credit card bills, which means the credit card companies are losing that money, too.
From what I can tell, the FDIC takes exception to a lender asking whether a borrower is “retired” or a “housewife”. WTF? If that is relevant to them in analyzing the loan, so be it. There is nothing inherently wrong or discriminatory about it. It’s like asking, “Do you have a job?”
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