Wednesday, December 23, 2015

H.R. 1737 - Discrimination in Consumer Auto Lending? Or Just Redlining On Wheels?

Consumer advocate (D) Senator Elizabeth Warren
Over the weekend I got an interesting email from the global citizen advocacy group urging recipients to sign a petition to General Motors demanding that the auto production and lending behemoth oppose a new piece of legislation known as H.R. 1737.

It also goes by the name of the “Reforming CFPB Indirect Auto Financing Guidance Act”. 

According to an advocacy letter drafted by the civil rights coalition The Leadership Council, H.R. 1737 would make it easier for companies that issue auto financing loans to consumers to engage in the discriminatory practice of charging minority car loan applicants much higher interest rates based solely on race and ethnicity by undermining the authority of the Consumer Financial Protection Bureau to be able to properly enforce laws designed to prevent racial discrimination in auto lending.

The editorial board of The New York Times drafted a detailed and informative op-ed piece back in June that summarized the dangerous economic impact of predatory auto loans - including the disturbing fact that since 2013, oversight of banks by the Consumer Financial Protection Bureau "has resulted in fines totaling $18 million and in payments totaling $136 million to 425,000 black, Hispanic and Asian borrowers who were charged higher auto-loan interest rates than comparable white borrowers."

As The Times op-ed details, last summer the CFPB also began oversight of non-bank providers of auto loans meaning the Bureau would now have oversight of 90% of auto loan providers in he U.S.

Good for consumers and a sense of fairness in the marketplace? Yes.

But Republicans and banks don't like it one bit - hence the aforementioned H.R. 1737.

But this legislation didn't just morph out of thin air, the GOP has been waiting for a chance to spring legislation like this since 2010.
Remember the fierce Republican opposition to consumer rights advocate and academic Elizabeth Warren's nomination to become the head of the (then) newly-created Consumer Financial Protection Bureau  back in 2011?

44 GOP Senators signed a letter opposing Elizabeth Warren
As Jason Easley reported for PoliticusUSA back in 2013, 44 angry Republican Senators were so eager to do the bidding of the nation's largest banks and Wall Street firms that they engaged in an all-out campaign to block President Obama from appointing her to be the head of the CFPB.

In fact, as Easley observes, after being shut out of becoming the head of the CFPB by a GOP effort fueled by lobbyists and special interests, Warren turned around and ran for the U.S. Senate - and won.

Now she's not only the senior Senator from Massachusetts; she also sits on the powerful Senate Banking Committee. (Sorry Republicans.)

The CFPB is a federal agency created by Congress in 2010.

Its task is to serve as a federal watchdog for the nation's banks, credit card companies and other financial institutions to ensure that consumer rights don't get trampled through deceptive practices, manipulation of consumer protection laws, or the kinds of sketchy policies (i.e. inflated credit card interest rates, or excessive bank overdraft fees) that allow companies to unfairly bilk average Americans in the name of profit.

As the CFPB Website states, "The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act) established the CFPB"

Remember, the CFPB was created in the wake of the devastating financial crisis sparked by too-big-to fail banks, Wall Street firms, insurance companies and ratings agencies colluding to bundle consumer mortgages into complex, high-risk financial products which they then traded and sold like poker chips until it crashed the economy.

Of course, it was the same American  tax payers who lost jobs, homes or saw their net worth plummet during the crisis who picked up the bill for the $700 billion in TARP stimulus those same companies received from the federal government to prevent a global financial implosion.

So it says a lot about today's Republican party that not only did they fight tooth and nail to prevent the CFPB from functioning as an independent watchdog agency for the benefit of average Americans - now they're trying to use their legislative power to make it easier for companies to intentionally discriminate against people of color who apply for car loans.

Sound sketchy? It is.

1950's protests against Redlining in Chicago
But sadly, the complex process of government legislation and policy colluding with private financial institutions to profit off of racial prejudice is nothing new in this nation.

It's still happening here in the 21st century.

In fact, as Emily Badger reported in The Washington Post back in May, profiteering from discriminatory auto lending is not really all that much different than the government sanctioned practice of Redlining used to help banks purposefully block racial minorities from home ownership and intentionally manipulate property values by segregating neighborhoods. 

So in the coming months when you hear Republican presidential candidates pontificating about the merits of "a level playing field", or a Supreme Court justice loftily justiying the elimination of key provisions of the 1965 Voting Rights Act based on their arcane legal determination that racial discrimination no longer exists - just remember H.R. 1737.

Just in case Donald Trump's insufferable pandering to bigotry, intolerance, sexism and anti-immigrant hysteria isn't enough, H.R. 1737 will remind you of what today's Republican party really stands for.

This legislation symbolizes just how far we've come as a nation - and how long we have to go.

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