Rule Curbing Discrimination in Auto Lending in Peril, Consumer Group Says
Republican Senator Pat Toomey of Pennsylvania says he’ll do all he can to repeal federal guidance that he calls ‘ill-conceived.’
Federal guidance that helps curb discriminatory lending in the auto industry is under attack and should be protected, a consumer group said on Friday.
“More than two decades of data and research show discrimination in the auto lending market, which hits low-income families and communities of color,” Delvin Davis, a senior researcher at the Center for Responsible Lending, said in a statement. "The Consumer Bureau’s mission shouldn’t be curtailed or retracted because of industry influence.”
The GAO's letter, which came in response to a congressional inquiry, threatens a rule that the Center for Responsible Lending contends is key to limiting discriminatory impact of dealer interest rate markups in the auto lending industry.
The GAO's finding was applauded by the U.S. senator who made the inquiry, Pennsylvania Republican Pat Toomey, who vowed to "do everything in my power to repeal this ill-conceived rule."
During the past two years, the Consumer Bureau and the Department of Justice have jointly taken enforcement actions that netted more than $218 million in fines and restitution to consumers who paid more in interest than they should have due to discriminatory dealer markups, according to the advocacy group.
In October, the National Consumer Law Center released research that found car dealers charging Hispanics more than non-Hispanics for add-on products such as service contracts and window etching.
A related study also released in October by the Consumer Federation of America found that women with perfect driving records often pay significantly more for auto insurance than men with identical records and other characteristics used by insurers to set prices.