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Wednesday, July 15, 2015

Justice Department and Consumer Financial Protection Bureau Reach Groundbreaking Settlement to Resolve Allegations of Auto Lending Discrimination by Honda

The Department of Justice and the Consumer Financial Protection Bureau (CFPB) announced today a groundbreaking settlement to resolve allegations that American Honda Finance Corporation (Honda) engaged in a pattern or practice of discrimination against African-American, Hispanic and Asian/Pacific Islander borrowers in auto lending. Honda is based in Torrance, California.

The settlement is especially noteworthy because of the company’s commitment to significantly limit the discretion of car dealers to charge interest rate markups on Honda loans. Specifically, Honda has agreed to change the way it prices its loans by limiting dealer markup to 125 basis points (or 1.25 percentage points) for loans of 60 months or less, and to 100 basis points (or 1 percentage point) for loans greater than 60 months. The settlement also provides $24 million in compensation for alleged victims of past discrimination by the nation’s ninth largest auto lender.

“We commend Honda for its leadership in agreeing to impose lower caps on discretionary markups and for its commitment to treating all of its customers fairly without regard to race or national origin,” said Vanita Gupta, head of the Civil Rights Division. “We recognize that dealerships perform a valuable service in connecting customers with lenders and that they should be fairly compensated for that service. We believe that Honda’s new compensation system balances fair compensation for dealers and fair lending for consumers. We hope that Honda’s leadership will spur the rest of the industry to constrain dealer markup to address discriminatory pricing.”

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3 comments:

  1. AnonymousJuly 15, 2015 at 12:46 PM

    Okay, so the last time I filled out a loan app, I don't remember seeing a box to indicate what race I was.
    It was all about the credit score.......period.

    ReplyDelete
  2. AnonymousJuly 15, 2015 at 2:12 PM


    Same as the housing crash; the creditworthy will subsidize the less creditworthy. Based on guv'mint edict and arm twisting.

    ReplyDelete
  3. AnonymousJuly 16, 2015 at 4:02 AM

    This will be another cash cow like the Pigford class action suit, where a couple dozen black farmers were genuinely proven to have been discriminated against, yet hundreds of thousands of blacks piled on, each claiming to have been "victimized black farmers" demanding compensation.

    There will end up, like Pigford where more blacks tried to claim they were owed compensation than the total number of black farmers. More blacks will sign up for "compensation" from Honda than they ever sold here total.

    ReplyDelete

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