The Federal Financial Forum

‘Opponents of the “disparate impact” theory, which the Consumer Financial Protection Bureau is employing to prove discrimination in auto finance, were hoping the theory would get its day in court next month before the U.S. Supreme Court — and lose.

But the town council of Mount Holly, N.J., voted last week to settle a housing discrimination lawsuit that would have tested the disparate impact theory, and specifically whether discrimination has to be intentional to be actionable.

WASHINGTON, Nov. 15, 2013

I would like to address Director Cordray’s statement that the CFPB has a “proven statistical methodology” to measure alleged patterns of discrimination in the financing of auto purchases.

It appears that the CFPB has borrowed the statistical method it is using is from the healthcare community who also uses proxy measures to determine ethnic participation at healthcare facilities.  The technology of choice is Bayesian analysis.

BuckleySandler LLP

On October 30, a bipartisan group of 22 Senators sent a letter to the CFPB raising concerns about CFPB guidance affecting the indirect auto financing market and auto dealers’ ability to negotiate retail margins with consumers. The guidance at issue, contained within CFPB Bulletin 2013-02, advised bank and nonbank indirect auto financial institutions about compliance with federal fair lending requirements in connection with the practice by which auto dealers “mark up” the financial institution’s risk-based buy rate and receive compensation based on the increased interest revenues.

WASHINGTON — The Consumer Financial Protection Bureau on Monday gave more clues about the methods underpinning its claims that auto dealers engaged in bias in setting interest rates for car loans. But the National Automobile Dealers Association says the agency didn’t provide the answers that its members were looking for.