A staff report by the Financial Services Committee uses internal CFPB e-mails and documents to reveal the Bureau is knowingly using flawed and inferior methods to allege racial bias in auto lending. The result of the CFPB’s efforts could mean higher consumer prices when it comes to buying a car or truck. To read the committee staff report, click here.
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Wall Street Journal: Consumer Watchdog Pushed Discrimination Case on Vulnerable Firm: Report
| When federal regulators launched a crackdown on alleged discrimination in auto lending two years ago, they knew their methodology would be questioned. But they calculated they could secure a market-shaping settlement by going after a company unlikely to fight the charges because it needed to avoid a complaint to clinch government approval for a broader restructuring. |
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New York Times: Consumer Bureau Faulted on Auto Lending Inquiry
| The House committee’s report details behind-the-scenes communications among consumer bureau staff members that acknowledged that their methodology for determining discrimination was “less accurate” and “inferior” to others. Still, they pressed ahead with the case against Ally, knowing, the committee report said, that it was under pressure to get federal approvals for its restructuring. |
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American Banker: House GOP Accuses CFPB of Improper Auto Lending Crackdown
| American Banker published a series of stories in September that showed CFPB staffers knew their methodology overestimated the number of minorities who were potentially harmed by dealer pricing, but continued to use it so they could seek big settlements with major lenders in an attempt to eliminate or curb price discretion. |
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Washington Examiner: GOP says feds using 'junk science' to attack auto dealers
| Specifically, the formula combined surname and geography-based information to guess the race and ethnicity of the applicant. According to the report, top CFPB officials continued to use the formula even though they declared it "less accurate" than other methods. |
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Politico Pro: House Republicans slam CFPB's auto-lending enforcement
| Disparate impact - the theory that racial discrimination can be proved with data even if there was no intentional bias - came up frequently during CFPB Director Richard Cordray's last appearance before the House panel in September. Members, including a few Democrats, blasted the director as he denied the bureau committed any wrongdoing. |