Bill Would Let Car Dealerships Overcharge African Americans, Hispanics
The U.S. House of Representatives, with the support of Rep. Brenda Lawrence, passed legislation Monday that would make it easier for dealerships to continue the common practice of overcharging African Americans and Latinos for their car loans.
“Just when you think Congress could not possibly sink any lower, they manage to do it, spending time and effort on protecting the right to discriminate when they could be, say, funding the government, or fighting terrorists.” said Deacon Charles Thomas of Michigan United. “I can’t come up with a single, acceptable reason she would vote in favor of this legislation. I would be very interested to hear why she decided to support a bill that discriminates against the very people she is supposed to represent.“
The “Reforming CFPB Indirect Auto Financing Guidance Act” actually aims to eliminate guidance issued by the Consumer Financial Protection Bureau (CFPB) in 2013 that was designed to combat a long-standing pattern of charging African Americans and Hispanics more for car loans than white customers with similar credit histories.
The CFPB’s guidance encourages banks to get rid of an incentive system in which dealerships made more money if they marked up interest rates on car loans. This practice routinely led to African American and Hispanic borrowers getting loans that were worse than their white counterparts, even if they had similar credit histories. Worth noting is that the CFPB said banks could continue the markup practice if they took steps to ensure that they would not regularly overcharge borrowers based on race or national origin.
While discrimination in lending is already illegal, it can be difficult to detect and stop without the efforts of agencies like the CFPB and the Department of Justice.
In recent years, the CFPB and the Department of Justice took actions resulting in more than $140 million in fines and restitution to African Americans and Hispanics who were charged higher interest rates than whites, despite having similar credit risks.