A letter sent last week by the American Financial Services Association and other trade associations to Richard Cordray, director of the Consumer Financial Protection Bureau, was aimed at prodding the CFPB to publicly respond to a study AFSA commissioned last year.
“There certainly has been more than enough time for them to address some of the issues,” Chris Stinebert, CEO of AFSA, told Automotive News in a phone interview.
A CFPB spokesman responded to the paper’s request for comment in an email on Monday. “The Bureau is committed to continuing our dialogue with other federal agencies, lenders, advocates, and researchers ... and we view the American Financial Services Association-funded policy paper as an effort to inform that dialogue,” the spokesman, Sam Gilford, wrote.
AFSA released the study in November. At that time, the CFPB said the bureau would “review it carefully.”
The study was performed by Charles River Associates. Its conclusions criticized the CFPB’s approach to auto lending. Specifically, the study questioned the statistical method the CFPB uses to identify borrowers that belong to legally protected classes, such as minorities.
The CFPB claims that lenders are responsible for allowing dealers to charge different amounts of dealer reserve, often called dealer markup, for customers with similar credit histories. If that practice results in higher rates for legally protected borrowers, it’s discrimination, according to the CFPB.
Besides AFSA, last week’s letter was signed by the American Bankers Association, the Consumer Bankers Association, the Financial Services Roundtable and the U.S. Chamber of Commerce.
“The Associations request that the Bureau conduct a thorough review of the CRA study, provide a public response to its findings and recommendations, and correct any bias in its testing methodology, before pursuing further dealer mark-up discrimination claims through supervisory or enforcement action,” the letter said.