In a letter to the CFPB Director, Democratic leaders of the Senate Banking Committee express their concerns about the Bureau’s commitment to combatting discrimination under ECOA and request responses to their questions.
Amid recent news reports of alleged discrimination against women by Goldman Sachs in connection with the company’s new Apple credit card, Sen. Sherrod Brown (D-Ohio), Ranking Member of the Banking, Housing, and Urban Affairs Committee, and Sen. Elizabeth Warren (D-Mass), Ranking Member of the Banking Committee’s Subcommittee on Financial Institutions and Consumer Protection, have submitted a joint letter to Consumer Financial Protection Bureau Director Kathleen Kraninger expressing their deep concerns about "the Bureau’s commitment to enforcing fair lending laws and carrying out its statutory responsibilities, especially after the recent structural changes to the Bureau's Office of Fair Lending." The senators’ Nov. 25, 2019, letter poses several sets of questions to Kraninger about the CFPB’s enforcement of the Equal Credit Opportunity Act and other federal fair lending laws and requests responses to these questions "by no later than December 09, 2019."
Backdrop. As observed by Warren and Brown, in early 2019, Goldman Sachs "teamed up with Apple to launch the Apple Card, a credit card designed for use with Apple Wallet, an application on Apple's iPhone." While Goldman Sachs touted the initial success of the Apple credit card, Warren and Brown point to recent news reports about consumer complaints that "Goldman Sachs offered lower credit limits to women who applied for Apple Cards than it did to similarly creditworthy men." According to the senators, Apple co-founder Steve Wozniak "raised alarm about this apparent discrimination," saying that "he received an offer for ten times the credit limit that his wife received even though they shared the same assets and bank accounts, and his wife had a higher credit scores."
Letter highlights. In their letter, Warren and Brown assert that these news reports "raise questions on whether there is a pattern of sex discrimination in the underwriting of the Apple Card, and underscore the importance of the CFPB adequately monitoring the lending practices of financial institutions, including those like Goldman Sachs, that are new to the consumer lending space." Goldman Sachs is portrayed as having "first entered the consumer lending space in 2016" with the launch of its online lending platform (Marcus).
The senators express their concern about "whether regulatory changes and modifications to the CFPB's structure under Trump Administration officials have hobbled its role enforcing fair lending laws." More pointedly, in their letter to Kraninger, Warren and Brown state that, "under your leadership, the CFPB has shown little willingness to fulfill its statutory mandate to enforce fair lending laws."
To "gain a better understanding of how the CFPB enforces fair lending laws, how recent changes may have impacted that enforcement, whether Apple Card faced adequate scrutiny before going to market," and "in the wake of the allegations related to the Apple Card's terms," Warren and Brown pose four sets of questions in their letter to the CFPB director. Among other things, the senators inquire about:
- how the CFPB prioritizes and evaluates risk when determining which financial institutions to examine for compliance with fair lending laws;
- whether the CFPB has ever conducted a supervisory examination to "assess the consumer fair lending compliance management system of Goldman Sachs";
- which part of the Bureau addresses fair lending issues associated with financial technology products and what kind of staffing is in place, regardless of whether any specific action has occurred "in the Goldman Sachs Apple Card instance"; and
- what standards the Bureau employs to determine "whether an act constitutes a violation of ECOA," including one under a "disparate impact theory," and whether the standards are different from those used under the tenure of the two previous CFPB directors.
Companies: Apple; Goldman Sachs
MainStory: TopStory CFPB ConsumerCredit CreditDebitGiftCards EnforcementActions EqualCreditOpportunity FinTech Loans OversightInvestigations
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