Congressman David Scott recently lambasted the Consumer Financial Protection Bureau for its “deceitful” auto-loan regulation based on “shamefully flawed” information. Now it looks like the Georgia Democrat was being kind.
The Republican staff of the House Financial Services Committee has released a trove of documents showing that bureau officials knew their information was flawed and even deliberated on ways to prevent people outside the bureau from learning how flawed it was.
The bureau has been guessing the race and ethnicity of car-loan borrowers based on their last names and addresses—and then suing banks whenever it looks like the people the government guesses are white seem to be getting a better deal than the people it guesses are minorities. This largely fact-free prosecutorial method is the reason a bipartisan House supermajority recently voted to roll back the bureau’s auto-loan rules.
The vote occurred before the release of the House committee report, which shows that the regulators were guessing and knew that they weren’t even making good guesses. A May 2013 draft of a memo for bureau Director Richard Cordray prepared by bureau staff including Assistant Director Patrice Ficklin reported they had “reason to believe that our proxy is less accurate in identifying the race/ethnicity of particular individuals than some proprietary proxy methods that use nonpublic data.”