A House Financial Services Committee report said the CFPB is erroneously sending settlement checks from Ally Financial to white borrowers after the lender's alleged racial discrimination against African-Americans, Hispanics and Asians.
Committee Chairman Jeb Hensarling (R-Texas) said the CFPB's actions "invite fraud on a massive scale" and called upon Attorney General Loretta Lynch to suspend the distribution of settlement checks until the eligibility of the recipients are confirmed in writing.
The report said that despite objections from the DOJ and CFPB staff, the bureau proceeded with a disparate impact calculation that allowed the agency to reach the maximum number of claimants without verifying their settlement eligibility. The result was some white borrowers got settlement checks.
The report cited internal bureau documents and analysis obtained by the committee. Among the documentation, a staff report revealed the DOJ originally objected to the CFPB's approach, but conceded after push back from the senior level at the CFPB.
According to the committee report, it was unclear who made the decision to implement the settlement – Director Richard Cordray or the bureau's Assistant Director for Fair Lending and Equal Opportunity, Patrice Ficklin.
The original proposal for the distribution method from the DOJ to the CFPB would have limited the number of consumers to receive checks to a maximum of 143,000 consumers, considerably less than Cordray's estimate of 235,000, the report said.
As a result of the findings, the House Financial Services Subcommittee on Oversight and Investigation will call Ficklin to testify in early February at a hearing on the CFPB's auto-lending supervision, enforcement and rulemaking.
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