The House Financial Services Committee released a report Wednesday criticizing the Consumer Financial Protection Bureau’s process for issuing payouts to affected borrowers in Ally Financial Inc.’s disparate impact case.
“They are now concerned that the way funds are being distributed won’t compensate the members of protected classes, and some non-Hispanic white borrowers will receive the funds instead,” said John Redding, a partner at Buckley Sandler LLP.
The committee is calling to suspend the distribution of funds, and requesting that the bureau be called to testify before the House in early February, according to the report. In the meantime, consumers will probably continue to receive checks, Redding told AFN, in accordance with the CFPB’s current algorithm — the so-called BISG methodology, which identifies a person’s race by analyzing surnames and locations.
“But doing so may subject them [the CFPB] to further criticism from Congress,” he said. “As of right now, nothing’s stopping them from a legal perspective; it’s more about politics than anything else.”
Eventually, it is reasonable to expect some changes in the bureau’s way of distributing funds, but not in the CFPB’s BISG methodology, he added.
As for Ally, “When you look at the consent orders, you see that Ally was required to deposit the funds very shortly after the order, which they did. I don’t know what other, if any, role Ally has in this case,” he said.Like This Post