CFPB responds to letter from Democrats requesting auto fair lending information and gets new request from Republicans

by Ballard Spahr LLP
Contact

As we reported, on May 28, 2013, Democratic members of the House Committee on Financial Services sent a letter to Director Cordray requesting information about the CFPB’s activities related to auto fair lending, including “the methodology the CFPB has adopted to determine whether fair lending violations exist.”

In his response dated June 20, Director Cordray states that a typical fair lending exam of an “indirect auto lender would include a review of credit denials, interest rates quoted by the lender to the dealer (called ‘buy rates’), and any discretionary mark-up of the buy rate by the dealer (the interest rate quoted by the dealer to the consumer minus the ‘buy rate’).”

Mr. Cordray states that the CFPB uses a “proxy methodology” for differentiating among consumers based on race, ethnicity and gender. According to Mr. Cordray, the CFPB uses both surnames and geographic location in its proxy data and conducts its proxy analysis using publicly available data from the Social Security Administration and the Census Bureau.

The information provided by Mr. Cordray does not appear to be fully responsive to the Democrats’ request. In asking for information about the CFPB’s methodology for establishing discrimination, the Democrats wrote that “[s]pecifically, we would like to know the method the Bureau is using to identify different groups of consumers, the factors it is holding constant to ensure its findings of pricing differentials are attributable to a consumer’s background, and the numerical threshold at which the Bureau determines that disparate impact is present.” 
While Mr. Cordray discussed the CFPB’s use of proxies, he did not address the other items of information sought by Democrats beyond stating that the CFPB’s analysis “considers appropriate analytical controls in reviewing data to determine whether a specific policy results in unlawful differences on a prohibited basis.”

Mr. Cordray also comments in his letter that the Bureau has found “frequent instances where lenders had robust fair lending compliance programs for mortgage lending but weak or non-existent fair lending compliance programs for other types of consumer lending.”

Democrats are not alone in requesting auto fair lending information from the CFPB. According to an American Banker report, House Republicans, including 27 members of the House Committee on Financial Services, sent a letter to the CFPB on June 20 asking for details on how the CFPB obtains data such as borrower background and pricing discrepancies. The letter reportedly raises concerns that the CFPB’s guidance relating to disparate impact analysis of dealer rate participation will hurt consumers by weakening the competition among dealers that results from consumers being able to negotiate financing terms with dealers. It also reportedly criticizes the CFPB for adopting the guidance without providing an opportunity for public comment and without releasing the data, methodology and analysis it relied on.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Ballard Spahr LLP | Attorney Advertising

Written by:

Ballard Spahr LLP
Contact
more
less

Ballard Spahr LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.