Consumer Portfolio Services Inc. Chief Executive Charles Bradley was the latest industry insider to defend subprime auto lending, during the company’s fourth-quarter earnings call last week. The Irvine, Calif.-based lender received a subpoena from the Department of Justice in mid-January, “much like everyone else in the industry,” Bradley said, and is in the process of preparing for the CFPB by conducting an “exhaustive review” of its lending practices and portfolio.
So far, CPS has found no disparity in terms of lending to protected classes. “We again sort of think we have got way ahead of that curve in terms of looking at our portfolio and looking at disparity of impact, both in how we lend and how our dealers make loans,” Bradley said.
Although CPS has not found evidence of disparate impact within the company’s internal practices, it has found such evidence within its dealer base.
“About every quarter we notify eight dealers or so, and I mentioned [out of] 8,000, that there might be some disparity of impact in the way they make car loans, and so we cut them off our program and put them into a rehabilitation program,” Bradley said. “At which point, if they can complete that and demonstrate that there have been some changes, they can re-enter our program. [It’s] those kind of things that I think can put us in a very strong position in terms of where we sit with all the CFPB stuff that’s coming down the pike.”
