Last week American Banker reported on statistics from the CFPB showing potential evidence of race discrimination within the agency. As explained in the article:
Specifically, CFPB managers show a pattern of ranking white employees distinctly better than minorities in performance reviews used to grant raises and issue bonuses. Overall, whites were twice as likely in 2013 to receive the agency's top grade than were African-American or Hispanic employees, the data shows.
The report is particularly interesting because the statistics can only be evidence of discrimination under the somewhat controversial disparate impact theory that the Bureau has pushed in recent years. Using a disparate impact analysis the CFPB has declared policies and procedures discriminatory based on statistical evidence showing a disproportionate effect on protected classes. For example, if the CFPB finds that minorities are statistically more likely to be charged a higher interest rate for a particular financial services product or program, the CFPB may declare that product or program discriminatory. The disparate impact theory does not require any evidence of discriminatory intent on the part of the lender. Ronald Rubin, a former CFPB enforcement attorney, recently explained the CFPB's use of disparate impact theory in relation to indirect lending by car dealers.
On Monday, American Banker reported that the CFPB has scrapped the evaluation program and gone back to the drawing board in an attempt to create an evaluation program that won't provide statistics that could be interpreted as evidence of discrimination.
Whether the CFPB will come back from the experience with a better understanding of the pitfalls of the disparate impact theory remains to be seen.
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