Providing for Congressional Disapproval of A Rule Submitted By Bureau of Consumer Financial Protection

Floor Speech

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Mr. BARR. Mr. Speaker, I thank the chairman for yielding.

I rise today in support of the Congressional Review Act resolution to disapprove the Consumer Financial Protection Bureau's 2013 auto finance guidance.

The Dodd-Frank financial control law explicitly exempted auto dealers from the Bureau's supervision and regulation. However, this did not deter former Director of the Bureau Richard Cordray from trying to regulate this industry, circumventing the legislative intent of Congress through a backdoor guidance.

Not only did the Bureau lack the legal authority to issue such regulation, it also based its justification for the guidance on a flawed statistical methodology.

That methodology, which supposedly provided evidence of widespread discrimination of auto lenders against minorities, determined the probability of an individual's race and ethnicity merely based upon last names and ZIP Codes. According to a 2014 study, only 50 percent of Asians and 24 percent of African Americans were correctly identified by the Bureau's flawed methodology.

My friend and colleague from Illinois, a gentleman who self- identifies as a scientist, says that statistical uncertainties are always present. But the truth is that the Bureau's own records show that the Bureau designed a remuneration process that ensured that 235,000 consumers would receive remuneration checks, even though the Bureau knew that White consumers were not discriminated against on account of race. They would receive remuneration checks under that process.

Now, to me, Mr. Speaker, that is not statistical uncertainties that are always present; that is a totally flawed process. I think the American taxpayer would be totally offended to know that their tax dollars are going to people who were never harmed. That is not flawed statistical analysis that is always present; that is outright just a totally flawed process that rips off American taxpayers.

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Mr. BARR. If the lack of legal authority and deeply flawed methodology were not enough, the real-world consequences of the guidance could have been far worse if auto dealers didn't do everything they could to fight against the guidance. That is because auto dealers help customers, especially those customers with less than pristine credit scores.

Let me give you an example from Kentucky. A female buyer, having gone through a recent divorce, had credit challenges. She was offered a 7.99 percent rate by a competing bank that put her payment at $506 a month. But thanks to Ford Credit's Certified Pre-Owned Program, which is only available through a franchised Ford dealer, the same customer was able to receive a 2.9 percent rate, for a payment of $441 a month. This scenario saved her almost $70 a month and a whopping $4,200 in interest charges over the life of the loan.

Ms. MAXINE WATERS of California. Mr. Speaker, I can't believe that in 2018 we are on the floor of Congress seeing the denial of some of my colleagues about discrimination in the auto lending business and defending the automobile lenders despite the fact there has been a study that shows that there has been discrimination.

The study should have included women, because they discriminate against women also. They think women are stupid and don't know how to negotiate a loan. Women have been taken advantage of too.

Maloney), the ranking member of the Subcommittee on Capital Markets of the Financial Services Committee.

Mrs. CAROLYN B. MALONEY of New York. Mr. Speaker, I thank the ranking member for yielding and for her leadership on the Financial Services Committee.

Mr. Speaker, I strongly, strongly oppose this resolution, which will actually encourage discrimination against people of color who want to buy cars.

I know my Republican colleagues claim that this is about a rulemaking process, but let's be clear: This is not about process. This is about discrimination.

This issue is very simple. Financial institutions that make auto loans have an obligation not to discriminate against borrowers based on the color of their skin. This has been the law since Congress passed the Equal Credit Opportunity Act over 43 years ago.

The Consumer Financial Protection Bureau found compelling evidence that, when financial institutions allow auto dealers to increase the interest rates on auto loans for specific borrowers that come into their dealership, minority borrowers were systematically charged a higher rate. In other words, this particular practice resulted in illegal lending discrimination.

So the Consumer Financial Protection Bureau did what it was supposed to do. It told financial institutions to stop this illegal and discriminatory practice or risk being sued by the Bureau for lending discrimination.

But the Consumer Bureau did not stop there. It also told the lenders exactly how they needed to change their practices to avoid being sued for lending discrimination.

This kind of transparency is a good thing. It allows the Consumer Bureau to root out discrimination in the auto lending market while also providing guidance and certainty to all the lenders that want to do the right thing.

Yet this guidance is exactly what the resolution before us today would repeal. Why? This would have the effect of encouraging discrimination against minority borrowers in the auto lending market and discouraging the Consumer Bureau from cracking down on this horrible practice.

I believe we need to stand strong against discrimination in all forms, including lending discrimination.

Mr. Speaker, I urge my colleagues to vote for their constituents, to vote for consumers, and to oppose this resolution.

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