WASHINGTON, D.C. — With auto lenders, service providers and
dealers being potential targets, the Department of Justice and the Consumer Financial
Protection Bureau signed an agreement Thursday to strengthen coordination on
fair lending enforcement and avoid duplication of their respective federal law
enforcement efforts.

Under the Dodd-Frank Wall Street Reform and Consumer
Protection Act, officials said the CFPB works with the department and other
regulators to promote consistent, efficient and effective enforcement of
federal fair lending laws. The Dodd-Frank Act also expressly authorizes the
CFPB to conduct joint investigations with the department in matters relating to
fair lending.

Both the CFPB and the Justice Department have authority to
protect against discriminatory lending under the Equal Credit Opportunity Act
(ECOA). The ECOA makes it illegal for creditors to discriminate against
applicants in credit transactions because of race, color, religion, national
origin, sex, marital status, age, income coming from a public assistance
program, or an applicant's exercise of certain consumer protection rights.

The department has the authority to bring federal lawsuits
to enforce the ECOA against any creditor that engages in a pattern or practice
in violation of the ECOA or based on referrals of ECOA violations from federal
bank regulators including the CFPB. The CFPB is authorized to bring public
enforcement actions against any person subject to the CFPB's supervisory or
enforcement authority for violations of the ECOA. The CFPB is also required to
refer certain violations of the ECOA to the department for possible enforcement
actions.

Agency leaders said they are committed to cooperation and
avoiding duplicative efforts.

"Discrimination undermines equal access to credit," said
Richard Cordray, director of the CFPB. "Today's agreement is a critical step to
better protecting consumers from illegal and discriminatory lending practices.
We look forward to continuing our partnership with the Justice Department under
this new framework."

Thomas Perez, assistant attorney general for the civil
rights division, added, "The Department of Justice welcomes the new tools and
resources the CFPB can bring to the fight against lending discrimination," said
"Cooperation between our two agencies promotes strong and effective civil
rights enforcement, and today's agreement will further our ongoing
collaborative efforts."

Federal officials released a Memorandum of Understanding (MOU)
that outlines the general framework for:

—Sharing information and preserving its confidentiality: The
agencies will be sharing information in matters that the CFPB refers to the
Justice Department, in joint investigations under the ECOA, and in order to
coordinate fair lending enforcement. The MOU establishes strict confidentiality
protections for this shared information.

—Joint investigations and coordination: The MOU provides for
collaboration in investigations as well as coordination in joint
investigations. The agencies will also meet regularly to discuss pending fair
lending investigations and opportunities for coordination.

—Referrals and notifications between the agencies: Like
other federal bank regulators, the CFPB will refer matters to the Justice
Department when it has reason to believe that a creditor has engaged in a
pattern or practice of lending discrimination. Because a referral to the
Justice Department does not affect the CFPB's authority to pursue its own
supervisory or enforcement action, the CFPB and the Justice Department will
coordinate their efforts to avoid unnecessarily duplicative actions. The
agencies have also agreed to notify each other at key stages of their
enforcement work, such as the opening of an investigation or filing of a
lawsuit.

The agencies said they will periodically assess the implementation
of this agreement and are committed to finding ways to further strengthen their
coordination efforts.

The MOU can be found here.


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