0 Members and 1 Guest are viewing this topic.
The U.S. Department of Justice and the Consumer Financial Protection Bureau (CFPB) announced Friday that the government has reached a $98 million settlement agreement with Detroit-based Ally Financial over discriminatory auto lending practices — the federal government’s largest auto loan discrimination settlement in history.The announcement comes as lawmakers of both parties are raising questions about guidance issued by the independent bureau earlier this year it says is intended to curb discriminatory auto lending.“With this largest-ever settlement in an auto loan discrimination case, we are taking a firm stand against discrimination in a critical lending market,” Attorney General Eric Holder said.The investigation by the CFPB and DOJ found that Ally violated the Equal Credit Opportunity Act (ECOA) by charging African-American, Hispanic, and Asian and Pacific Islander borrowers higher dealer markups for their auto loans than similarly-situated, non-Hispanic white borrowers.When prospective car buyers finance auto loans, dealers often facilitate indirect financing through third-party lenders like Ally, which then set a risk-based interest rate that allows auto dealers to change when they finalize the deal.A consent order, filed Friday in federal court in Michigan, requires Ally Financial and Ally Bank to pay $80 million in damages to consumers and $18 million to the CFPB's Civil Penalty Fund. The settlement, still subject to court approval, also requires Ally to improve its monitoring and compliance systems.In March, the CFPB issued a bulletin clarifying that it would hold indirect auto lenders accountable for discriminatory pricing.Lawmakers and industry advocates have made it clear they oppose any form of discrimination in auto lending, but have raised questions about the process by which the CFPB issued the guidance — notably, without public hearing or comment.The National Automobile Dealers Association says that competition frequently allows consumers to actually get lower interest rates than those they were offered directly by b
Author
Topic: DOJ reaches largest-ever federal government settlement over auto loan discrimination (Read 526 times)
