NADA/ AIADA press CFPB to justify its position on car loan discrimination
CFPBês regulation of banks on car loans will cost consumers millions
NADA and AIADA are pressuring the Consumer Financial Protection Bureau to respond to a study released last fall faulting the methodology used by the CFPB that found discrimination against minorities applying for auto loans.
The study of CFPBês methodology was done by Charles River Associates and commissioned by the American Financial Services Association. But as AIADA Chairman Bradley Hoffman pointed out in a blog post, because auto loan applications are not permitted to ask the applicantês race, the CFPB had to use a proxy method that used names and addresses to guess the applicantês race.
Incredibly, it managed to correctly identify African-American borrowers only 24 percent of the time, Hoffman wrote. He encouraged AIADA members to host Congressional representatives at dealership events to educate them about the retail auto industry.
NADA has been pushing back on the CFPB issue since the auto finance directive was issued two years ago and has seized on the Charles River study as evidence that the CFPBês action is unjustified. Given that the CFPBês guidance will cost American consumers millions of dollars every year and bring economic harm to the very people it intends to help, you would think the agency would actually examine a rigorous peer-reviewed study that discredited its methodology, NADA spokesman Jared Allen told Automotive News.Download Bulletin PDF