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House Vote Undermines Anti-Discrimination Laws

Thursday, November 19, 2015

Bill Creates Obstacles to Enforcing Fair Lending Laws

The U.S. House of Representatives voted last night to pass H.R. 1737, the Reforming CFPB Indirect Auto Financing Guidance Act. The bill requires the Consumer Financial Protection Bureau to rescind its warning to lenders who provide auto loans through dealerships that certain practices risk violating fair lending laws.

Auto dealers have discretion to raise the interest rate for which borrowers qualify and then keep some or all of the additional charges. This discretionary mark-up of interest rates has been shown to disproportionately impact African American, Latino and Asian/Pacific Islander borrowers.

In response to the House vote, CRL Senior Vice President Chris Kukla said:

This bill takes us backward in enforcement of civil rights laws. In the face of strong opposition from civil rights groups who have been fighting for equal economic opportunity for decades, members of the House chose to stand in law enforcement's way.

Discrimination in auto lending is well documented. Lawsuits from 20 years ago showed shocking levels of discrimination. And, despite settlements that were meant to eliminate disparate treatment of black, Latino and Asian borrowers, the discrimination persists. Law enforcement agencies are working to enforce anti-discrimination laws. The House decided to put up barriers to stop them.

No one should be charged more for a loan because of the color of their skin. This should be a given in 2015 but sadly it's not. Congress should be on the side of consumers, not discrimination.

We urge the Senate not to follow the House and not sanction discrimination.

For more information, or to arrange an interview with a CRL spokesperson on this issue, please contact Chris Kukla at chris.kukla@responsiblelending.org or 919-308-0770.