WASHINGTON, D.C. -

Nearly simultaneously as the director of the Consumer Financial Protection Bureau reportedly responded to a series of policy questions from the House Democrats, lawmakers from the other side of the aisle fired a list of inquiries about how the agency intends to regulate auto lending.

A total of 35 Republicans led by Rep. Spencer Bachus, chairman emeritus of the House Financial Services Committee, asked for clarity about the concept of disparate impact, the legal theory the CFPB is using to determine if dealers are involved in discriminatory lending practices associated with vehicle financing. Bachus made his points in light of the CFPB issuing its guidance for indirect auto lending back in March.

"It is highly concerning that the agency the agency is issuing such significant new directives without affording the public a proper opportunity to comment on its methodology and analysis for determining whether discrimination has occurred and without addressing the effect its directives on consumer financing and choice in the intensely competitive auto lending market," Bachus wrote in a letter addressed to Patrice Ficklin, the bureau's assistant director of the office of fair lending and equal opportunity.

Within 30 days of receiving the letter that went to the CFPB last week, the Alabama representative requested the full set of details concerning the bureau's statistical disparate impact methodology, including four segments:

—Proxies used to determine the background of consumer credit applicants.

—Factors held constant to isolate the applicant's background as the sole reason for any alleged pricing disparity.

—Metric used to measure whether pricing disparities exist.

—Numerical threshold at which it was determined that a pricing disparity on a prohibited basis constitutes an Equal Credit Opportunity Act (ECOA) violation.

"Because allegation of disparate impact do not involve any intentional conduct, but instead consist solely of statistical analysis of past transactions, it is essential that the model used for this purpose have a very high degree of accuracy and demonstrated reliability," Bachus said in the letter obtained by Auto Remarketing's sister publication, SubPrime Auto Finance News.

Bachus articulated two other specific requests in his letter. He wanted to know details about the CFPB's coordination with the other federal agencies — primarily the Federal Reserve and the Federal Trade Commission — that Congress granted authority to implement and enforce ECOA on dealers. Bachus also is interested in why the standard rulemaking process "apparently wasn't utilized" before the CFPB issued its vehicle financing guidance nearly three months ago.

Besides Bachus, the other representatives who signed this latest letter to the CFPB included:

Rep. Shelley Moore Capito
Rep. Gary Miller
Rep. Lynn Westmoreland
Rep. Scott Garrett
Rep. Randy Neugebauer
Rep. Patrick McHenry
Rep. John Campbell
Rep. Peter King
Rep. Edward Royce
Rep. Michele Bachmann
Rep. Stevan Pearce
Rep. Blaine Luetkemeyer
Rep. Bill Huizenga
Rep. Sean Duffy
Rep. Robert Hurt
Rep. Michael Grimm
Rep. Steve Stivers
Rep. Stephen Fincher
Rep. Marlin Stutzman
Rep. Mick Mulvancy
Rep. Dennis Ross
Rep. Robert Pittenger
Rep. Ann Wagner
Rep. Garland Barr
Rep. Tom Cotton
Rep. Keith Rothfus
Rep. Tom Latham
Rep. Jack Kingston
Rep. Steve King
Rep. Mark Meadows
Rep. Steve Stockman
Rep. George Holding
Rep. Walter Jones
Rep. Tom Marino

"In sum, it appears to us that a loss to consumers would occur if the CFPB uses its supervisory and/or enforcement authority to weaken the intense competition that results from the ability to negotiate with the dealer to obtain financing terms that are more competitive than the best terms the consumer can secure from any other source," Bachus said.

"It is troubling that the agency has initiated this process without a public hearing, without public comment and without releasing the data, methodology or analysis relied up to support such an important change in policy," Bachus continued.

Similar Request from House Democrats

Last month, Rep. Terri Sewell championed a similar request to the CFPB. SubPrime Auto Finance News published the details of Sewell's inquiry here.

CFPB director Richard Cordray reportedly responded to Sewell's inquiry last week. The bureau refused to provide SubPrime Auto Finance News a copy of Cordray's letter, but Bloomberg published a portion of the director's response.

According to this online report, Cordray told Sewell that "We have found frequent instances where lenders had robust fair lending compliance programs for mortgage lending but weak or non-existent fair-lending compliance programs for other types of consumer lending.

Bloomberg's report indicated that Cordray made clear in his letter that the bureau is examining possible discrimination beyond the housing and auto finance market.

"Determining whether discrimination has occurred is a case-specific and fact-intensive inquiry," Cordray wrote. "The bureau is accordingly evaluating possible discrimination in both auto lending and in other markets on a case-by-case basis."

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