Slideshow 'Lies, Damn Lies, and the CFPB's Proxy Method': Comments of the Week

Published
  • October 02 2015, 7:30am EDT
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American Banker readers share their views on the most pressing banking topics of the week. Comments are excerpted from reader response sections of AmericanBanker.com articles and our social media platforms.

On the Consumer Financial Protection Bureau's practice of erring on the side of overestimating discrimination in car lending:

"Is there something wrong with this approach? 'We are charging you with robbing that store, because our statistics correlate pretty highly with you.' That is the logic of the Bureau's indirect auto lending enforcement project."

Related Article: "Lawmakers Give CFPB's Cordray Earful Over Auto Lending Crackdown"

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On the CFPB's methodology for measuring disparate impact, which relies on factors such as surnames and geography, to essentially make educated guesses about a borrower's race:

"With apologies to Mark Twain, '… there are lies, damn lies and statistics (that are based on the 'guess' that is the proxy method).'"

Related Article: "Lawmakers Give CFPB's Cordray Earful Over Auto Lending Crackdown"


On most Democrats' resistance to creating a commission to oversee the CFPB:

"These same politicians will be pushing for a commission if a Republican wins the White House."

Related Article: "Defecting Dems Surface in CFPB Battle"


Critiquing the way the EMV security standard is being rolled out in the U.S., with signature rather than PIN verification:

"The EMV specifications can accomplish much, but only to the extent they are adopted. Without mandating the use of a PIN, EMV serves to authenticate the card. Without mandating that the unique transaction identifier to be generated by the seller is created in full compliance with the EMV standard, the transaction could be at risk. Without mandating the PIN, or a positive cardholder verification method, the person presenting the card may or may not be the cardholder."

Related Article: "EMV Cards: the Beginning of the End for Hackers"

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On the revelation that Bernard Siskin, the CFPB's outside expert on disparate impact, also advises banks:

"Exploiting an opportunity to work both sides of the street is the issue that bothers me. Suppose a consultant to an individual bank designed an underwriting system for the bank, and then testified in a public hearing that the system discriminated explicitly against various legally protected groups. My first question would be whether the consultant did anything to tell the client bank about the discriminatory effects first and urge them to repair the system rather than opportunistically collecting fees for testifying against them in public. Depending on the answer, either the consultant or the bank should be ashamed of themselves."

Related Article: "CFPB's Outside Expert on Disparate Impact Also Advises Banks"


Responding to an argument against putting a commission in charge of the CFPB:

"It is ironic to hear a member of Congress (Rep. [Carolyn] Maloney) be concerned about a commission slowing reaction to a need for regulatory intervention. I would imagine that, just as with Congress, most of the "heavy lifting" would be done by the staff. However, the guidance from a commission would likely be more balanced than from a single director, regardless of his/her qualifications and/or party affiliation."

Related Article: "Defecting Dems Surface in CFPB Battle"


On banks' recent demands for greater regulation of potential rivals (<a href="https://twitter.com/nhighlandfin/status/648471098883833856?refsrc=email&s=11" target="_blank">via Twitter</a>):

"Inevitable. Banks complain that #FinTech is not regulated. FinTech success will lead to regulation."

Related Article: Regulatory Concerns Strain Bank-Fintech Relationship