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  • Acts
  • 1998
  • Chapter 228 AN ACT RELATIVE TO SELF TESTING PROGRAMS BY BANKS.

Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:


Chapter 167 of the General Laws is hereby amended by adding the following three sections:-

Section 49. Whenever used in this section, and sections 50 and 51, the following words shall, unless the context requires otherwise, have the following meanings:

"Appropriate corrective action", action taken by the board of directors or trustees of a bank pursuant to findings contained in a compliance review document in accordance with 12 CFR 202.15.

"Compliance review document", a report prepared for and at the direction of the compliance review supervisor or created by said supervisor, and certified by said supervisor, detailing the results of any self testing program together with recommendations, if any, for appropriate corrective action.

"Compliance review supervisor", an employee, officer or director of a bank appointed by the board of directors or trustees of such bank to supervise the self testing programs hereinafter defined.

"Fair lending laws", any federal or state law, rule or regulation which expressly regulates the equal availability of credit including, but not limited to, applicable provisions of chapter 151B and the Federal Equal Credit Opportunity Act.

"Self testing", any program or study relating to the practice of using fictitious applicants for credit, so-called, "matched pairs", and Regression Analysis, that a bank voluntarily conducts or authorizes a third party to conduct to test for distinctions in treatment or discrimination based on any prohibited basis as defined under the applicable sections of chapter 151B or the Federal Equal Credit Opportunity Act, including but not limited to, race, ethnic background or gender at the pre-application and application stage of the residential mortgage lending process.

Section 50. A bank, by vote of its board of directors or trustees, may appoint a compliance review supervisor to conduct self testing programs on a continuing basis. Upon any such appointment, such board of directors or trustees forthwith shall file with the commissioner the name of the person so appointed.

For the purpose of conducting such self testing programs, such supervisor may utilize the services of departments and other employees and officers of the bank and, with the approval of such board of directors or trustees, third-party contractors. The results of any such self testing program, together with all documents and materials relevant thereto, shall be certified by such supervisor as a compliance review document and shall be the property of the bank. The supervisor shall transmit said document to the board of directors or trustees for its review and appropriate corrective action, whenever the same is deemed to be required. Any such compliance review document, together with a statement signed by the directors or trustees detailing appropriate corrective action, if any, taken in consequence thereof, shall be provided to the commissioner during the course of any examination of the bank conducted by him pursuant to section 2.

Section 51. Except as provided in section 50, the proceedings of the compliance review supervisor and the contents of any compliance review document shall, notwithstanding any other law or regulation to the contrary, remain confidential and shall not be discoverable or admissible in evidence in any civil proceeding, except an enforcement proceeding brought under state law by the appropriate federal or state regulator of the bank, arising out of or related to any self testing programs conducted by such supervisor. A person who assists in any such program or who prepares, reviews or receives such compliance review document shall not be required to give testimony in any civil proceeding, except such enforcement proceeding by such federal or state regulator, as to any matters concerning the contents of any such compliance review document. Any evidence elicited from any such person relative thereto shall, except for said exception, be inadmissible in any such civil proceeding brought under state law.

The provisions of this section shall not apply to any such compliance review document if, after the receipt of a compliance review document from the compliance review supervisor, the board of directors or trustees of the bank:-

(a) fails to take appropriate corrective action, unless a reasonable good faith determination has been made in writing by said directors that such action is not required; or

(b) voluntarily discloses all or any part of the details or conclusions of said compliance review document to an applicant or to the public, or otherwise uses the same as a defense to charges that the bank has violated any fair lending law; provided, however, that the disclosure to an applicant or to the public that the bank has a self testing program in existence or the release of said compliance review document to the commissioner or the bank's primary federal regulator shall not be deemed to be a voluntary disclosure for this purpose.

The provisions of this section shall not apply to any information required by law or regulation to be maintained by or provided to a governmental agency while such information is in the possession of such agency to the extent that applicable law authorizes or requires its disclosure.

Nothing in this section shall be construed so as to limit the discovery or admissibility into evidence in any civil action of documents that have not been certified as compliance review documents.

Approved August 6, 1998.