The CFPB is trying to pay $80 million to minorities who may not be minorities after all

"nermal" (nermal) 01/25/2016 at 19:01 • Filed to: dumb, regulations, last week's news, wtf, fine time

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I’m surprised this wasn’t covered more here - Because what could possibly go wrong when you guess if somebody is a minority or not?

http://www.autonews.com/article/201601…

Let’s see if I get this straight - The CFPB makes a bank “guess” if somebody is a minority, based on things like their zip code and name. This is done to check for discriminatory lending practices. After all, banks can’t mark somebody as a minority on credit applications, so a guess is the best they can do for checking purposes. The CFPB then finds out that a certain bank and car dealers are charging a higher interest rate to a protected class of people based on their guesses.

Bing bang boom, $80 million fine time for that bank, in this case Ally. The CFPB then needs to distribute the proceeds from the fine to the people that were identified as being taken advantage of. However, that pesky guessing up front is coming back to bite them, as there are now people from non-protected classes (aka white people) getting sent letters to claim their settlement check, which is something greater than $150.

WTF?

For Sweden > nermal 01/25/2016 at 19:05

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Do Americans driving cars with manual transmissions count?

ranwhenparked > nermal 01/25/2016 at 19:16

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I’m not totally sure, but does this feel at least a little racist? I mean, sitting in an office and guessing someone’s race and ethnicity purely by name and zip code?

“Oh, his last name is Jefferson, he must be African-American, his last name is O’Neal, so he must be white, his last name is Samadi, so he must be Muslim, etc.”

BTW, I know a white guy with the surname Rodriguez, so there are probably several easy to find flaws with this strategy.

Sam > nermal 01/25/2016 at 19:16

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I'm sure CFPB doesn't care. They got what they wanted - their cut of the fine.

Party-vi > For Sweden 01/25/2016 at 19:22

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I don’t think Luddites are a protected class of citizen.

wkiernan > nermal 01/25/2016 at 19:28

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Well now, if you were discriminated against because of your zip code, what does it matter if you were white or black? Even though the whole idea of segregation via zip code obviously was to deny cheap credit to blacks, everybody who got fucked on account of his or her zip code deserves reparations. You could say that, in the case of the white beneficiaries of this judgment, it’s a reward for being cool enough that lilywhite you didn’t scamper out of a zip code just because some of your neighbors might have been those people .

For Sweden > Party-vi 01/25/2016 at 19:33

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typical tyrannical mods

wkiernan > Party-vi 01/25/2016 at 19:35

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No indeed, driving a stick is quite reward enough. Indeed, people who can only drive slushboxes ought to get special government subsidies to compensate for their miserable deficiency, like the tragically crippled and blind folks do. It’s not their fault; the fault lies in their stars.

jariten1781 > nermal 01/25/2016 at 19:39

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The whole concept of unintentional disparate impact is tied up with nonsense like this. The Supreme Court has been getting closer and closer to just culling it all together if read the opinions for the last couple sessions. They’ve basically said, ‘y’all keep abusing disparate impact regulations and we’re going to render them unenforceable...be very careful and conscientious going forward’.

Sounds like CFPB missed the memo. Wonder if someone will push this up the chain.

RallyWrench > Party-vi 01/25/2016 at 19:49

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Hey man, we, like, have power, you know... the Luddites will rise ag... ooh, is that a brownie, man? Far out...

Party-vi > For Sweden 01/25/2016 at 19:56

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I can’t post tits anymore so I’ll just whine about all my personal issues is that cool?

samssun > nermal 01/25/2016 at 20:21

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How dare you question my demand to be judged by the color of my skin rather than the content of my character (but only when it benefits me)?

nermal > wkiernan 01/25/2016 at 21:01

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The equation doesn’t work that way, I don’t think the banks or dealers really care where you live.

It’s more that the CFPB uses zip code as a way of measuring somebody’s likelihood to be non-white. Think Compton, whose residents are ~75% non-white, compared to Beverly Hills, which is ~82% white. The CFPB notices that the bank & dealers are charging a higher interest rate to residents of Compton relative to those in Beverly Hills, credit scores and whatnot being similar. This assumes that based on the demographics of the zip code, most of those Compton people paying the higher interest rates are non-white.