auto dealer in black and red logo
MenuMENU
SearchSEARCH

House Democrats Join Republicans in CFPB Grilling

Republicans were expected to lash out at the CFPB during its semi-annual report to Congress, but there were a few unexpected critics from the other side of the aisle as well.

by Eric Gandarilla
March 21, 2016
5 min to read


WASHINGTON, D.C. — Appearing before the House Financial Services Committee to deliver the Consumer Financial Protection Bureau’s semi-annual report to Congress, Director Richard Cordray was grilled for three hours about the bureau’s activities in the auto finance, mortgage, credit card and payday lending industries. But it wasn’t just Republican committee members asking the tough questions.

Rep. David Scott (D-Ga.) made clear Democrats also have serious concerns about the bureau’s use of the disparate impact doctrine to uncover alleged discrimination in vehicle financing, noting that the bureau’s approach may be hurting the very people it’s trying to protect.

“When you discriminate [against dealers who adjust interest rates to meet a payment a customer asks for], that is discrimination against African-Americans,” Scott said. “When your rule and your actions deny them access to that car, how are they going to get a job? These are the unintended consequences.

“The unintended consequence is that you’re strangling the poor dealer and denying the very customers that you’re supposedly trying … to help,” he added.

This was the first time Cordray appeared before the committee since Republican members issued two staff reports critical of the bureau’s activities in the auto finance arena.

The first report, released on Nov. 24, revealed that the CFPB pursued its potentially “market-tipping” enforcement action against Ally Financial and Ally Bank even through bureau officials knew the statistical method used in its case was “prone to significant error.” It also charged that the bureau was able to secure its December 2013 settlement with Ally because of “undue leverage” — Ally needed Washington regulators’ approval for a broader restructuring of its business.

To that latter charge, which Rep. Jeb Hensarling questioned Cordray on during the hearing, the CFPB director said, “We had pursued this investigation against Ally for more than a year before they brought it to our attention.”

In the second report, released on Jan. 26, Republican committee members again hammered the bureau over its handling of the Ally settlement. Based on internal CFPB documents, the report charged that some settlement checks were sent to white borrowers. It also charged that the bureau declined to employ a distribution method proposed by the U.S. Department of Justice (DOJ) because it would limit the number of recipients to between 36,000 and 143,000. The bureau had alleged that 235,000 consumers were harmed by Ally’s dealer markup policy.

Citing the report, Rep. Sean Duffy (R-Wisc.) questioned Cordray about the accuracy of the bureau’s method for identifying victims. Cordray said he didn’t think anyone could ever be 100% accurate, noting that there was nothing unique in how the bureau handled disbursement of the settlement checks.

Duffy again cited the reports when he questioned Cordray about the accuracy of the bureau’s method for identifying disparate impact discrimination in its case against Ally. Cordray responded by saying the bureau’s methodology had “a high degree of accuracy.”

“I can’t give you specific percentages, but if you want my staff to work with your staff on specifics there, we could do that,” Cordray offered. “I don’t know if anybody is ever 100% accurate, but we get as close as we can.”

Unsatisfied with Cordray’s response, Duffy asked why the bureau had yet to comply with the committee’s three-month-old request for documents related to the bureau’s case against Ally, noting the information contained in the requested documents could reveal exactly how much more African-Americans paid in interest rate markups than white borrowers. Cordray again offered to have his staff work with Duffy’s staff, noting that what he saw “was systematically, African-Americans and/or Hispanic borrowers in certain matters were paying more.”

Still not satisfied, Duffy pointed to a slide projected behind him during his line of questioning. It showed findings from the bureau’s three-year investigation of Toyota Motor Credit. To Duffy, the data didn’t show much of a disparity between what white borrowers paid in interest rates and what African-Americans paid.

The slide showed the bureau examined 116,500 African-American borrowers who took out non-subvented auto loans between Jan. 1, 2011, and December 31, 2013. Of that total, 66,000 paid more than what white borrowers paid in interest rates, which, based on Duffy’s calculations, meant that 56% of African-American borrowers paid more than white borrowers and 44% paid less.

Duffy also pointed to data associated with the 7,559 African-Americans who took out subvented loans during that period. Of that total, 2,668 of them paid more than the average paid by white borrowers, which based on Duffy’s calculations, meant 35% of African-American borrowers paid more than white borrowers and 65% paid less.

“What I can say is that subvented auto loans can behave differently from normal auto loans,” Cordray responded. “And that is something normal in auto loans and that is something we take account of in our analysis.”

The bureau’s use of the disparate impact theory, which says a policy or practice may be deemed discriminatory if it has an adverse impact on a protected group, consumed a large portion of last Wednesday’s three-hour hearing. Mixed in were questions about the bureau’s activities in the mortgage, credit card and payday lending industries.

Toward the end of the hearing, Rep. Ed Perlmutter (D-Colo.), the co-author of the CFPB reform bill that would repeal the bureau’s guidance on dealer markups if approved by the Senate, called for more communication between the agency and dealers. Cordray admitted that wasn’t the case early on, as the bureau wanted “to be respectful of our judicial lines.” He noted, however, that the two sides now have an open line of communication.

“Being a regulator, you’re never anybody’s best friend, and that’s not your job and that’s not what you’re supposed to be,” Perlmutter acknowledged. “But you’re supposed to be looking out for the best interests of the people within your jurisdiction of your agency and I thank you for doing that in so many different ways.”

Originally posted on F&I and Showroom

More Dealer Ops

two cars on a billboard, No Hidden Fees
ComplianceMay 1, 2026

Dealer Ads and the FTC

The agency has made it clear in recent enforcement actions and warnings, in auto retail and other industries, that advertised prices must include all nonoptional costs to the consumer.

Read More →
Closeup of white car's headlight, front end
Dealer Opsby Hannah MitchellApril 17, 2026

Used Autos Supply Dwindles

The March shopping surge, despite high prices, cut into inventory by the most since the thick of the pandemic, Cox Automotive analysts calculated.

Read More →
hands making protective frame over red car, Risk Reality Check, Be Proactive, Auto Dealer Today logo
Dealer OpsApril 1, 2026

Managing Risk Effectively Through Changing Times

The variables influencing risk pricing have changed significantly over the past five years. Being proactive and responsive to emerging trends is not optional but essential.

Read More →
Ad Loading...
Car key, stacks of coins, and a paper car cutout with AutoPayPlus logo, representing auto financing, loan terms, and vehicle affordability trends.
Dealer Opsby StaffMarch 31, 2026

Survey Reveals What Won't Fix What's Breaking Car Sales

AutoPayPlus says extra-long auto loans are trapping consumers and threatening the dealer trade-in cycle, and that the industry is leveraging the wrong tools to combat high MSRPs.

Read More →
Headshots of two male executives
Dealer Opsby StaffMarch 24, 2026

IA American Appoints Two Execs

Senior vice presidents of the company's agent and dealer channels chosen to support general agents and help auto dealers with sales and performance.

Read More →
Dealer Opsby StaffSeptember 8, 2025

Cox Automotive Acquires Inspection Firm

Full ownership of Alliance Inspection Management, or AiM, meant to unlock growth for Manheim inspection capabilities

Read More →
Ad Loading...
Dealer Opsby StaffAugust 26, 2025

Assurant Expands Partnership With Holman

Extended collaboration delivers training, products and performance development to 30 newly acquired Holman dealerships

Read More →
Dealer Opsby Hannah MitchellAugust 26, 2025

Franchises, Throughput Down in First Half

A handful of states see franchise growth through June, while EV sales per store boost overall business in U.S.

Read More →
Dealer OpsAugust 25, 2025

How to Build a High-Performance Sales and F&I Team

Performance and profits start with people chosen and led the right way.

Read More →
Ad Loading...
Dealer Opsby Hannah MitchellAugust 19, 2025

Buy-Sells Up in Q2

Kerrigan metrics show there’s plenty of demand, though many sellers are waiting to pull the trigger.

Read More →