CFPB Clarifies Proxy Methodology, Responds to Senators on Disparate Impact
The Consumer Financial Protection Bureau has sent back a letter to a pair of senators describing the method it uses to figure out disparate impact claims, according to published reports. The agency also posted a blog to its website yesterday outlining some of the specifics.
As CFPB officials have mentioned previously, the agency uses an “integrated” method to combine probabilities generated by specific surnames and geographies. “For the purpose of conducting our supervisory work, we have chosen to use proxy methods that rely solely on public data so that lenders can replicate our methods without the need to recreate or purchase proprietary databases as part of their own fair lending compliance management systems,” the letter reads, according to an article in American Banker.
The lawmakers’ original letter, led by Sen. Rob Portman (D-Ohio) and Sen. Jeanne Shaheen (D-N.H.), was signed by 22 senators, 11 from each party. It asked for more transparency from CFPB with regard to methodology.
The article also notes that at least three lenders have recently been referred for the Justice Department for fair lending violations.
