[T]he new Consumer Financial Protection Bureau [CFPB] is ginning up a campaign to use “disparate impact” analysis to charge racism in auto lending. That’s the theory that looks at statistics to prove bias without evidence of specific discriminatory intent. Never mind the financial or other circumstances of the borrowers beyond their race.
That is, car dealers must provide a proportionately equivalent number of car loans, at the same interest rate, to all racial groups, regardless of whether members of these groups are equally likely to repay the loan. Essentially, if Customer X has money in the bank and has never missed a day of work in his life, and Customer Y is living on welfare and just got out of jail, they must be regarded as equal credit risks if Customer Y is lucky enough to be black.
Obviously, there are plenty of blacks who are good credit risks. Equally obviously, there are many who are not. You would have to spend your entire life sealed in a windowless room with no access to the outside world except a TV tuned to PBS not to know that there are cultural differences that make blacks as a group significantly less likely to repay their loans than whites.
To achieve the liberal conception of equality, these differences must be papered over by forcing car dealers to make bad loans, effectively subsidizing cars for those who don’t pay their bills at the expense of those of us who do pay our bills, because we will end up having to pay more to make up the loss.
If all of this sounds familiar, you could be thinking of the Community Reinvestment Act, spawned by Carter but doubled down on by Clinton and Obama, by which the federal government forced banks to make mortgage loans on a racial basis lest they be accused of “redlining.” This was a primary cause of the 2008 economic crash.
Patrice Ficklin, head of the bureau’s Office of Fair Lending and Equal Opportunity, revealed that “we have found substantial and statistically significant disparities between the interest rates paid by African American, Hispanic, and Asian car buyers when compared to the interest rates paid by white car buyers with similar credit scores and other factors.
Really. Can we see some evidence of this?
No, actually, we cannot. (continue reading)