WASHINGTON, D.C. — Jeb Hensarling (R-TX), chairman of the House Financial Services Committee, today issued a report critical of the Consumer Financial Protection Bureau (CFPB)’s use of the “disparate impact doctrine” to find alleged discrimination in vehicle financing.

The findings of the report, "Unsafe at Any Bureacracy: CFPB Junk Science and Indirect Auto Lending," was published by the Republican staff of the House committee. It shows that the bureau’s methodology for determining disparate impact and potential harm to protected classes is flawed and prone to overestimation. The report also shows that the federal agency was aware of apparent discrepancies, yet pushed forward with claims of discrimination that resulted in enforcement actions that forced companies to pay millions of dollars in fines and penalties.

The committee staff report cites Charles River Associates study the American Financial Services Association (AFSA) commissioned and published a year ago. The study examined more than 8.2 million vehicle finance contracts and concluded that the disparity alleged by the CFPB between interest rates charged to minorities and non-minorities is not supported by the data.

Chris Stinebert, the association’s president and CEO, noted that alleged pricing discrepancies between minorities and non-minorities for auto financing rates are simply not supported by data in the CRA study. The AFSA is a national trade association representing the consumer credit industry.

“AFSA is hopeful that this new information in the committee report will help bring a reasonable resolution to this important issue,” Stinebert said. “Consumers deserve to be treated fairly, and financing cars and trucks through the dealer remains the most convenient and cost effective way to purchase a vehicle.”

To review the committee’s report, click here.

Originally posted on F&I and Showroom