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Consumer Finance Protection Bureau: Hotbed of Discrimination?



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The Consumer Finance Protection Bureau (CFPB) is the newest agency in D.C. and it’s extremely powerful. In concert with the Department of Justice, it pursues financial institutions using the disparate-impact theory of discrimination. The great benefit of disparate-impact theory, at least to the regulators, is that no disparate treatment need be shown. If a company has a facially neutral policy or criteria that nonetheless has a disparate impact on minorities, the government claims that the company is discriminating on the basis of race.

The CFPB has used this tactic to great effect. It looks at loans made by financial institutions and if it determines that, on average, minorities receive less favorable loan terms, it sues the institution for discrimination even without any evidence of disparate treatment. Terrified of`prodigious litigation costs and the bad press of being accused a racist, the financial institutions almost inevitably settle (and thereby implicitly commit themselves to making bad loans) and pay a ransom to get the government to go away.

Ironically, if the CFPB were a bank, it would have to sue itself for disparate-impact discrimination. American Banker recently reported that CFPB’s own employee evaluations indicate that white employees receive markedly better evaluations than do minority employees. In any other context, this would be evidence of disparate-impact discrimination. Imagine that.

But, protests the CFPB, there’s a legitimate nondiscriminatory reason for the disparity! That may very well be, but the CFPB doesn’t extend the same presumption to the unfortunate businesses it regulates, business that have to expend enormous sums of money to defend themselves against an agency with seemingly unlimited resources – courtesy of the American taxpayer.

Furthermore, the CFPB has been accused of actual disparate treatment race discrimination. One CFPB attorney testified before the House Financial Services Committee regarding her experience, stating that since her arrival at the CFPB in June 2011, she hasn’t received a single case or enforcement matter, despite a successful legal career prior to arriving at the Bureau. She further alleges she was retaliated against after she filed an EEO complaint, and described the Bureau as having a “culture of retaliation and intimidation.” The investigator assigned to the complaint testified that she ”became a veritable hotline for employees at CFPB, who called to discuss their own maltreatment at the Bureau.” The investigator also found that the complainant was, in fact, retaliated against after filing her EEO complaint.

What’s the truth? What’s the other side of the story? After all, the CFPB may have a perfectly satisfactory response to the allegations, as do many institutions that find themselves in the cross hairs of a disparate impact claim. But the CFPB would do well to learn a lesson from its own encounter with disparate-impact theory and acknowledge that sometimes a racial disparity is just a racial disparity, not invidious discrimination. And before it attacks financial institutions and car dealers — because treating people equally sometimes results in disparate outcomes — perhaps the agency should humbly concentrate on the allegations of disparate treatment swirling through its own corridors.

— ​Peter Kirsanow, a member of the U.S.Commission on Civil Rights, and a former member of the National Labor Relations Board, practices and teaches labor and employment law in Cleveland, Ohio, and also has been, among other things, a laborer, painter, bouncer, truck driver, research assistant, security guard, warehouseman, think tanker, radio commentator, and paperboy, has run the 40 in 4.45, benches 420, likes puppies, Cohibas (er, Dominican), summer breezes, ‘24,’ and Smirnoff–most of which has no relevance whatsoever to the substance of this post but is mandated by the Federal Commissars of Mindnumbing Minutiae who maintain that if Kirsanow mentions, for purposes of reference and context, his position on the commission, members of the general public–who the commissars apparently presume are uniformly and galactically stupid–won’t understand that the post doesn’t necessarily reflect the position of the Civil Rights Commission as a whole, despite the fact that Kirsanow invariably says just that whenever he does reference his position on the commission, and therefore, he must list several other positions, titles and other inane biographical information about himself so that there’s absolutely no confusion that his comments are not those of the commission, its parents, agents, subsidiaries, successors or assigns, even though by every measure and all that is good, just and proper they really should be. Carissa Mulder writes frequently on civil rights.



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