On March 7, 2014, the House Financial Services Committee sent the CFPB a terse letter demanding an explanation of the CFPB’s methodology for determining discriminatory practices in the automotive finance industry. The CFPB was asked to respond by March 13, but the Committee reports that no response has been received. The Committee’s interaction with the CFPB comes in the wake of an increase in the number of automotive finance lenders under review since the beginning of 2013.

The CFPB claims that auto lenders permit discrimination by allowing car dealerships discretion in setting the dealer reserve on auto loans. The CFPB maintains that this practice has led to a disparate impact, or higher interest rates being charged to minorities. The automotive finance industry has questioned the CFPB’s methodology for pinpointing discrimination in the industry. The Committee’s letter to the CFPB may be a sign that the Committee shares the industry’s concern. At a minimum, the Committee appears to expect the CFPB to provide a detailed explanation of the methods it uses to determine discrimination in the automotive finance industry.