House Rolls Back Guidance On Auto Lending NPR's David Greene speaks to Rep. Jeb Hensarling and the Center for Responsible Lending's Debbie Goldstein about the vote to repeal CFPB guidance meant to protect car buyers from discriminatory loans.
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House Rolls Back Guidance On Auto Lending

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House Rolls Back Guidance On Auto Lending

House Rolls Back Guidance On Auto Lending

House Rolls Back Guidance On Auto Lending

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NPR's David Greene speaks to Rep. Jeb Hensarling and the Center for Responsible Lending's Debbie Goldstein about the vote to repeal CFPB guidance meant to protect car buyers from discriminatory loans.

(SOUNDBITE OF ARCHIVED RECORDING)

UNIDENTIFIED PERSON: On this vote, the yeas are 234, the nays are 175.

(GAVEL RAPPING ON PODIUM)

DAVID GREENE, HOST:

That's the sound of lawmakers yesterday voting to end an Obama-era action dealing with auto loans. This was guidance drafted in 2013 by the Consumer Financial Protection Bureau, and it was meant to protect people of color from being discriminated against when they apply for car loans. Republicans felt this guidance was illegal. They thought it placed a burden on banks and other lenders. And Republicans said it was unnecessary because current law protects people already. Now, Debbie Goldstein from the Center for Responsible Lending said it was very much needed. She pointed to a National Fair Housing Alliance study of lending discrimination.

DEBBIE GOLDSTEIN: They sent in white and nonwhite paired testers to the same auto dealership and found nonwhite borrowers ended up paying on average $2,500 more than a white borrower over the life of their car loan. And, of course, a car is a really vital tool for most families. It's how you get to work. So it's something that you really need, but that you might be paying for more just because of the color of your skin and the arrangement you got for your financing.

GREENE: Now, Congressman Jeb Hensarling, the Texas Republican who chairs the House Financial Services Committee, saw this study but was not convinced.

JEB HENSARLING: Yeah. I looked at those findings. Did you know that was based on a universe of two people? So this is, at best, junk science. But also, the Bureau's rule predated this study. So the rule was not even based upon the faulty study. And so it is frankly unfair, it is unjust and it never should have happened in the first place.

GREENE: So you dispute the notion that discrimination exists in the lending process?

HENSARLING: No. I didn't say that.

GREENE: OK.

HENSARLING: I said it's very serious, and it needs to be proven.

GREENE: But let me just - I do want to mention that there was a Vanderbilt University study, as well, from 2006 that suggested there was discrimination in this process. But I mean, you clearly don't - you've not seen enough evidence yet to convince you that this is a problem.

HENSARLING: Well, what I believe is that it is actionable. But if you look at the internal documents of the Bureau, they knew their evidence was shaky, and they were trying to press the envelope and they hurt consumers by doing so.

GREENE: Hurt consumers. Yeah. One of the Republican arguments here is that this guidance from the Obama administration made lenders afraid to offer discounts to anyone, regardless of race. And I asked Debbie Goldstein about that.

GOLDSTEIN: It's not clear they are offering discounts to people of color. It seems like they're offering discounts in a biased way to white borrowers. And I think here government policy should be aimed at rooting out discrimination, first and foremost.

GREENE: What do you tell a member of Congress who has voted or is voting to scrap these rules, and they say they clearly are not effective in terms of reducing this discrimination, they're an extra burden on lenders so let's scrap these and find a better way to enforce the law that's already there?

GOLDSTEIN: I think that the message that Congress is sending when they overturn the guidance is that they don't think discrimination is a problem and that the auto lending industry should be permitted to do what it wants.

GREENE: Republican Congressman Jeb Hensarling said that's not the message at all. He says he takes charges of discrimination very seriously but that what he sees as government overreach is not the answer.

HENSARLING: Where you have a specific dealer, a specific auto dealer engaged in reprehensible, racist, illegal, unlawful conduct, that needs to be brought to the attention of the proper authorities. But don't just willy-nilly make the accusation against an entire industry. That's outrageous.

GREENE: Texas Republican Jeb Hensarling on the House vote yesterday to scrap Obama-era rules on auto loans.

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