The CFPB uses proxy methodology to uncover potential discrimination in the indirect auto financing market and makes case-by-case determinations of whether such discrimination has occurred, the agency said in a letter to senators. Twenty-two senators wrote last week to CFPB Director Richard Cordray to request more information about how the bureau developed its March guidance on indirect auto lending.
The CFPB’s proxy methodology assigns the probability that a car buyer is a member of a particular race and sex based on the buyer’s first name, surname and census tract. Then, “the Bureau makes case-by-case determinations of whether to pursue supervisory or enforcement activities in response to statistically significant disparities,” the CFPB said.
Read the letter.