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Cotton Questions CFPB Director About Flaws in the Bureau’s Approach to Identify ‘Victims’ in the Ally Auto-lending Case

April 8, 2016

Contact: Caroline Rabbitt (202) 224-2353

Washington, D.C.- Senator Tom Cotton (R-Arkansas) today questioned Consumer Financial Protection Bureau (CFPB) Director Robert Cordray about the flaws in the Bureau's approach to identifying ‘victims' in the Ally auto-lending case, which was based the dubious statistical theory of 'disparate impact.' Senator Cotton also questioned Director Cordray about the Bureau's failure to include an identity verification requirement under penalty of perjury-as recommended by the Department of Justice-for claimants of the settlement, resulting in an unknown number of white individuals being compensated for discrimination on the basis of race. Selected excerpts from the exchange are available below. Additionally, click here to watch the video of the exchange.

Were they required to make any kind of statement or affirmation under penalty of perjury that they did in fact belong to the protected class under the settlement?

I recently discovered a very handy program on the Wall Street Journal that's similar to the methods that you used to evaluate the race of buyers of cars in pursuit of this enforcement action. You just plug in the name and zip code and out pops the statistical likelihood of your race. Now, the Journal does caveat that they don't have the exact method that you do and of course, the address is more reliable than the zip code.

But, coincidentally, at a hearing on Tuesday, Senator Brown revealed his zip code in Ohio to be 44105. Shockingly, the program says that Senator Brown has an 89 percent likelihood of being black based on that name and zip code. Senator Shelby turns out to have a 70 percent probability of being black. Tom Cotton in the zip code where we sit has an 88 percent probability of being black. So using this example, if Senator Brown financed his vehicle through Ally he fell within the racially guessed thresholds that you just confirmed and he had no legitimate business reason to discount the APR he was offered, would the CFPB send him a remuneration check?

Sen. Brown would have been in the second-tier he would have had to opt-in, but he would not have had to make any statement under penalty of perjury or other kind of punishment for making a false statement?

Did the Department of Justice recommend that you require some kind of oath or affirmation under penalty of perjury?

The Obama Department of Justice suggested that you require what is routinely required on federal forms

Did you personally decline the Department of Justice's recommendation of a penalty of perjury attached to such statements?