Creepy, Stupid, And Awful: The Government Wants Lenders To Guess The Race Of Car Loan Applicants
I must have slacked off in reading the Declaration of Independence -- the part where it talks about the right to "life, liberty, and a brand new car."
According to a WSJ piece, car and truck loans were not among the contributors to the 2008 financial crisis and pose no "systemic" risk to the financial system. Yet, the Consumer Financial Protection Bureau, created by the Dodd-Frank Act to correct and prevent the causes of the 2008 crisis, wants to change the way car loans are made.
John Campbell writes at the WSJ that the agency wants financial institutions to guess the race, ethnicity and gender (based on an applicant's name and address) of a person applying for a car loan:
Put bluntly, they want lenders to profile you.It sounds bizarre. But during a conference call on March 21 to congressional offices explaining how auto lenders were supposed to comply with the Equal Credit Opportunity Act (as outlined in CFPB's Bulletin 2013-02), agency staff advised us that they would recommend that financial institutions use "proxies to give probabilities of the race, ethnicity and gender of borrowers" to guess if an applicant falls into a protected class, or not, for the purpose of setting interest rates. In other words, they would like lenders to use stereotypes associated with your name and location in order to monitor compliance with equal-opportunity requirements.
Does that mean a person named Jefferson who lives in the Bronx is to be presumed an African-American, but not a Jefferson in Wichita? Is Taylor Rosenstein living in Miami a woman or a man? He or she must certainly be Jewish, right?
What I just wrote is absurd and looks offensive. But it is exactly what the CFPB's advice would effectively require.
Under this scheme, banks and finance companies would employ highly questionable methods to presume the race and gender of each applicant and assess whether the interest rates they offer are discriminatory.
This guidance is not just stupid, it is incredibly offensive and contrary to standards of fairness and equality upon which our society is based. One can only imagine the legal and other costs it would entail if lenders tried to put it into practice.
The auto industry is one of the economy's bright spots right now. There is no need to knock it off track by diverting resources toward fixing a problem that doesn't exist, resources that might otherwise be used to make credit more available for consumers who want to buy a car. The percentage of consumer complaints on car loans was and continues to be very low, especially when compared with home loans.
Would that effect my ability to get a loan for a tractor?
Jim P. at April 28, 2013 10:48 PM
I would tell this agency that if they want guesstimates the race, gender, etc. of those who take out loans, they'd better goddamn do it themselves.
Patrick at April 29, 2013 3:36 AM
What about those of us that people have trouble guessing the race?
Thank Titty Fucking Christ it's not my gender people have difficulty with!
Ppen at April 29, 2013 3:39 AM
Freakenomics has dones several reports on names and discrimination software. This is there latest blog entry on it. http://www.freakonomics.com/2013/04/19/discriminating-software/
The problem I see with this gov't program though is forcing people to determine race/sex characteristics in a system where that probably doesn't exist, will be now used to do discrimination or some Pigford like reperations like scheme.
Joe J at April 29, 2013 7:07 AM
Fer chrissakes, why don't we just cut the red tape and make all this official? The government issues national ID cards, marked with one's class of citizenship. That way, authorities can simply look at your card and use that to determine what your rights are.
Cousin Dave at April 29, 2013 7:35 AM
I think these bureaucrats should go clubbing and get the clap from questionable individuals in dirty bathroom stalls. That would give these budding reverse Bull Connors something to REALLY worry about.
mpetrie98 at April 29, 2013 7:55 AM
The CFPB will not "correct and prevent" the causes of the 2008 financial crisis, it will institutionalize them.
Conan the Grammarian at April 29, 2013 10:09 AM
Business must be really good for lenders to discriminate against people who can pay them back.
It takes a government to fix a nonexistent problem by creating a real one.
MarkD at April 29, 2013 11:30 AM
That's an interesting idea, Cousin Dave. But how many classes of citizens do we have? I know of natural born and naturalized.
And the only distinction is eligibility to the Presidency.
Patrick at April 29, 2013 12:32 PM
I think what Cousin Dave means is women have more rights than men, gays have more rights than straights, blacks have more rights than whites, and Muslims have more rights than freaking everybody else.
Sosij at April 29, 2013 12:55 PM
Isn't this why the EEO form is separate from the loan app?
Jim P. at April 29, 2013 7:22 PM
Sosij is essentially correct. Not being a member of a "protected" class, there are many government-granted privileges and benefits from which I am specifically excluded. Further, there are a number of laws which, in application, are held to be enforceable only against members of my class. I am a second-class citizen.
Cousin Dave at April 29, 2013 8:16 PM
Cousin Dave and Sosij, thanks for the clarification. I understand. As one who is gay, but doesn't play the "gay card," I'm pretty much in the same position.
Which would indicate that the system encourages people to exploit their minority status rather than treat their non-majority characteristic as something incidental. I would rather have my own non-straight status as mostly ignored. I guess I'll have to get some inverted pink-triangle accessories and a rainbow t-shirt that says "Hate isn't a family value" or "Focus on your own damned family" when I go to take out an auto loan so the loan officers can "guess" I'm gay without me explaining that, so they can make sure I'm not getting an oppressive interest rate.
Patrick at April 29, 2013 11:46 PM
" I would rather have my own non-straight status as mostly ignored. "
Good for you. No sarcasm intended.
"I guess I'll have to get some inverted pink-triangle accessories and a rainbow t-shirt that says "Hate isn't a family value" or "Focus on your own damned family" when I go to take out an auto loan so the loan officers can "guess" I'm gay without me explaining that, so they can make sure I'm not getting an oppressive interest rate."
We all laugh, but... that's the way the game is played these days.
Cousin Dave at April 30, 2013 6:15 AM
As a straight, white man, I have come to peace with the fact that all the problems in the world are my fault.
Which way to the gulag?
I R A Darth Aggie at April 30, 2013 9:02 AM
A happy day is just around the corner IRA, soon hispanics will out number whitey, and every problem in the world can be blamed on mexicans!!!
lujlp at April 30, 2013 4:30 PM
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