Got my latest email newsletter from my intrepid Washington Representative, Ann Wagner (R-2). It contained this rather extraordinary paragraph:
The Senate and House took action to roll back the Consumer Financial Protection Bureau’s backdoor regulating of the motor vehicle industry. In 2013, the CFPB relied on “junk science” when issuing their guidance on indirect auto lending. The Dodd-Frank Act explicitly states the Bureau has no jurisdiction supervising this industry, yet time and time again we see it is an agency willing to issue regulation by enforcement. Since 2013, the CFPB has issued over $200 million in out-of-court settlements to auto lenders based on guidance that was flawed from the start, ultimately harming the very consumers they intended to protect. Through S.J. Res. 57, Congress will bring accountability back to the CFPB and ensure this blatant over-regulation never happens again.
Bet using the phrase “junk science” gave Wagner a real thrill since she continually cites real junk science to justify her effort to deny women their right to abortion. Republicans in general like nothing better than fracturing logic in order to try to turn progressive rhetoric to their own use.
But the style of GOP duplicity in Wagner’s effort to mislead her constituents has to take backseat to its substance. What she’s referring to, the “problem” addressed by S.J. Res. 57, is an effort to address discriminatory auto lending practices via guidelines for indirect lenders rather than auto-dealers who were exempted from consumer protection oversight by the Consumer Financial Protection Bureau (CFPB) established under Dodd-Frank. Specifically, the legislation Wagner touts attempts to nullify anti-discrimination provisions meant to protect minorities:
The fight centers on guidance issued by the CFPB in 2013 that took aim at a common industry practice in which auto dealers mark up interest rates offered by finance companies. Finance firms such as Ally, for example, set an interest rate based on objective criteria — including a borrower’s credit history and the size of the down payment. Auto dealers then are free to raise the interest rates within certain limits. The finance companies and the dealers split the extra profits.The CFPB argued that auto dealers were using that discretionary markup to charge black and Latino borrowers more than white ones, even if they had the same credit scores. Over several years, the agency fined numerous auto lenders millions of dollars for discriminating against minority borrowers.
What the “junk science” accusation in Wagner’s screed refers to is the CFPB’s use of a study by the Center for Responsible Lending that applied statistical analysis to large data sets selected on the basis of last name and zip code. No one disputes that such analysis may not work on the individual level. In the absence of data indicating the race of borrowers, however, far from being junk science, as Stuart Rossman, Director of Litigation at the National Consumer Law Center, puts it, “this analysis conducted on data from millions of auto finance transactions can find patterns that almost certainly reveal actual differences based on race.”
It also supplements numerous studies that have used other methodologies to show that lenders use the discretionary markup to disadvantage minority borrowers. Rossman, for instance, references more substantive data gleaned in the 1990s:
In fact, a few years ago, the National Consumer Law Center proved the same conclusion in courts of law based on data that did reveal the race of individual borrowers. In the late 1990s, we co-counseled class action lawsuits against all of the major auto finance companies challenging the use of discretionary dealer markups. In discovery, we obtained data on individual loans, and we hired an expert witness to match the loans to drivers’ license data in states that collected the drivers’ race. With millions of loans to analyze, we also could find the race of many borrowers who financed a car in a state that does not collect racial information but previously lived in a state that does. The results were overwhelming: Dealers were twice as likely to add a markup to the loans of African-Americans than to loans taken out by comparable white borrowers. Furthermore, when African-American and compatible white borrowers both were marked up, the African-American borrowers paid significantly more
That was 20 years ago you say – however a study earlier this year showed the same discriminatory lending patterns:
Discrimination in auto lending continues to be a very real problem. In early 2018, a study conducted by the National Fair Housing Alliance paired white and nonwhite testers to visit auto dealerships and shop for the same car within 24 hours of each other. The study found that, more often than not, the better qualified nonwhite applicant was offered more expensive pricing options than the less qualified white applicant. This resulted in those nonwhite borrowers paying on average $2,662 more than white borrowers over the life of the loan. Additionally, NFHA found that 75% of the time, white testers were offered more financing options than nonwhite testers. These statistics further prove the need for continued vigilant enforcement against violations of ECOA, as well as clear expectations for industry like the 2013 guidance provides.
So far no junk science, just many studies with diverse methodologies that point in the same direction. One that folks like Wagner don’t like to acknowledge straight-up. Because, hey, who wants to admit they support discrimination on the basis of race if it helps their banking cronies bottom line to deny it? Especially if the legislator in question has decided to cast her lot with the Idiot-in-Chief who’s helped her do lots of good for those in financial circles and who specializes in bringing the GOP’s racist dog whistles out of the shadows and into the light.