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JIM HENRY

Worried about the CFPB? You should be

Jim Henry is a special correspondent for Automotive News

Dealers and lenders are upset that the Consumer Financial Protection Bureau is demanding greater transparency from them, but isn't reciprocating.

Dealer and lender groups are especially anxious to know how, exactly, the CFPB does the math to determine whether lending policies have a "disparate impact" on minorities.

That's not an exact science. Just for starters, lenders don't keep track of what race borrowers are.

There are computer programs that can take an educated guess, mostly based on a person's name and where they live. It's also possible to figure out a statistical margin of error for any particular model.

But nobody outside the CFPB seems to know exactly what model the CFPB is using, what data they looked at or how precisely they came to the conclusion that indirect auto lending poses a "risk" of discrimination.

Auto lenders and dealers might not like hearing the details when they finally hear them, but at least they would have a more precise idea of how a potential case against them might be built.

And without knowing exactly what model the CFPB is using, members of the F&I community can't judge to what extent they are in the agency's crosshairs.

You can reach Jim Henry at autonews@crain.com

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