No, the fact that a special loan program is offered only to state employees, without any other facts, would not raise fair lending or UDAAP concerns. In fact, the federal banking regulatory agencies have encouraged banks to provide special assistance to borrowers affected by government shutdowns, most recently during the 2013 federal government shutdown.

Because a state employee loan program would not implicate any protected classes under Illinois or federal fair lending laws, we do not believe it would raise fair lending concerns. State and federal fair lending laws prohibit discrimination on the basis of certain protected classes, such as race, age, religion, national origin, and others. However, a borrower’s status as a state employee or non-state employee is not a protected class. We are not aware of any law that would prevent a financial institution from offering preferential loan terms to groups that are not protected classes (such as bank employees, subject to Regulation O restrictions), provided that there is no discriminatory impact on a protected class.

In addition, Regulation B’s special purpose credit program rules would not apply to this program — those rules apply to programs that purposefully take into account a protected characteristic in making loan decisions to benefit a certain group (for example, a special loan program for elderly customers). Because a payroll gap assistance program does not take into account any of Regulation B’s prohibited classes, the special purpose credit program rules would not apply.

Also, we do not believe that a state employee loan program would raise any UDAAP concerns without additional facts indicating that the program is unfair, deceptive or abusive.

The Illinois State Treasurer’s office has created a linked deposit program to encourage depository institutions to offer special loan programs to state employees during the current budget impasse. For more information about the Treasurer’s payroll gap loan program for state workers, read the IBA press release on the program, an American Banker article on the program,“State of Illinois program website“, and the State Treasurer’s press release.

For resources related to our guidance, please see:

• FDIC Press Release, Regulators Encourage Institutions to Work with Borrowers Affected by Government Shutdown (October 9, 2013)

• Illinois Human Rights Act, 775 ILCS 5/1-103(Q) (Unlawful discrimination is “discrimination against a person because of his or her race, color, religion, national origin, ancestry, age, sex, marital status, order of protection status, disability, military status, sexual orientation, pregnancy, or unfavorable discharge from military service . . . .”)

• Illinois Fairness in Lending Act, 815 ILCS 120/3 (No financial institution may “deny or vary the terms of a loan on the basis of the borrower’s race, gender, disability, or national origin.”)

• Equal Credit Opportunity Act, 15 USC 1691 (“It shall be unlawful for any creditor to discriminate against any applicant, with respect to any aspect of a credit transaction on the basis of race, color, religion, national origin, sex or marital status, or age . . . .”)

• Federal Register notice, special purpose credit program rules, 41 Fed. Reg. 29870 (July 20, 1976) (The special purpose credit program rules permit “a creditor offering certain special credit assistance programs to refuse to extend credit on a prohibited basis without violating” the Equal Credit Opportunity Act.)

• Consumer Financial Protection Act of 2010, 12 USC 5531 (This law prohibits unfair, deceptive or abusive acts or practices and defines “unfair,” “deceptive” and “abusive.”)