This is especially interesting to me right now because a growing trend in reputational risk areas, possibly linked to regulatory direction, is that banks are in some ways accountable for the businesses that they lend to. This goes further than anti-money laundering, which is illegal and banks are responsible for monitoring for. This is more like "What does the company you are lending to do with that money, and is it ethical?" I just sat through a very interesting presentation at my bank about some of the types of businesses we have decided to flat-out refuse to invest in - although the presenter assured us we wouldn't be telling them that the reason was simply we didn't want to be associated with them, of course.

Anyway one of our identified no-commercial-business-loan areas was "felons." I am not sure how aware my colleague is of the tricky ground she is standing on. Under current Fair Lending interpretation, bank policies can be found discriminatory simply if they overly impact a "protected group" adversely. I am worried that in our rush to avoid reputational risk we will accidentally create a disparate impact and have to answer for it - which would also be ironic.