How does the CFPB figure out who’s violating the law, anyway?
by. Henry Meier
When it comes to the CFPB and the House Financial Services Committee, I have taken the Committee’s criticisms of the Bureau with two grains of salt: from an ideological perspective the Committee and the Bureau are cats and dogs in Washington.
But, this morning the Bureau committed to openness is facing a justifiable heap of criticism for refusing to respond to a letter from the House Financial Services Committee asking it to explain how it determines which institutions are guilty of violating the Equal Credit Opportunity Act by engaging in indirect auto lending practices that have a disparate impact on minorities. Considering that this has been a point of emphasis since the Bureau released a Guidance on the issue and has subsequently brought enforcement actions against lenders for disparate impact violations, it seems more than reasonable that the Bureau should be willing and able to share this information. It is more than a little troubling that it has not done so.
Perhaps it is using the same public relations firm retained by the Malaysian government.
Why should credit union’s care? Because every time your credit union makes a lending decision, it must comply with Regulation B and other similar laws. From both a compliance and operational standpoint, the clearer disparate impact analysis is the better off all lenders are. For example, if your credit union is losing business to a car dealership down the street that always offers to beat your credit union’s financing terms, it makes perfect sense to have a policy in which you reserve the right to match or exceed that dealership’ s terms on a case-by-case basis. Assuming that your credit union doesn’t engage in overt discrimination, the policy does not violate federal law. It is open to all persons who meet the credit union’s lending criteria.
continue reading »
