This weekend, the New York Post uncovered a disturbing story about a racial discrimination settlement last year between Ally Bank and the Consumer Financial Protection Bureau.
According to the Obama administration, the story goes something like this: Ally, along with several other banks involved in the auto-financing industry, systematically discriminated against minority loan applicants for years, denying them loans and slapping them with higher fees than those levied against white customers. This led the CFPB to launch an investigation in 2013, the result of which has been more than $220 million in settlements with Ally and other lenders.
Naturally, few would criticize this administration for protecting American minorities from unlawful discrimination; there is simply no excuse for corporate racism in the 21st century. And after hundreds of minority applicants filed complaints against Ally, we can only applaud Obama for taking the steps necessary to keep auto lenders in line.
Except…there were no such complaints. No whistleblowers. No interviews with Ally employees that might have confirmed racial bias in the bank’s lending practices. According to the CFPB themselves, “the evidence of discrimination on the basis of race and national origin is strictly statistical.” In other words, disparate outcomes were enough for the federal government to come down hard on the nation’s auto industry. Despite all of the settlements, the government has not unveiled one shred of evidence suggesting that these banks purposely engaged in discriminatory conduct.
Ok, but what about those statistics? They must be awfully damning if these lenders are willing to settle with the federal government.
Well, not really. As it happens, the auto industry does not report on the race of their applicants, so the CFPB used last names and geographical indicators to guess at it. The Post notes that the agency’s own internal memos acknowledged the weakness of the case, citing significant “litigation risks” if they were to go to court.
This story is unlikely to gain much traction in the mainstream press. One, our media has shown little interest in exposing the Obama administration. Two, the fact that Ally and others ponied up the money will signal to many Americans that they are guilty as charged. Why wouldn’t Ally force the feds to prove their case at trial if they were innocent of discrimination? The answer isn’t clear, but there is one possible explanation. The Federal Reserve must approve a financial holding company’s charter on a regular basis, and the Fed informed Ally last year that the racial investigation would play a role in determining their decision. Ally paid up on December 20th, just four days before their charter expired.
Is the timing of that payment sufficient cause to accuse the Obama administration of extortion? Well, using their own logic – that outcome proves intent – the answer is clearly yes. Yes it is.