Examining Discrimination in the Automobile Loan and Insurance Industries

On May 1, 2019, Kristen Clarke, president and executive director of the Lawyers’ Committee for Civil Rights Under Law, testified before the U.S. House of Representatives Committee on Financial Services about discrimination in automobile loans and insurance industries. The hearing, “Examining Discrimination in the Automobile Loan and Insurance Industries,” displayed how unchecked auto lending discrimination contributes to the growing racial wealth gap, and people of color are often burdened with more expensive car loans than similarly-situated white consumers. 

Americans need reliable transportation to get to school, work, and other essential places. Communities of color that are deprived of economic investment and fair lending options often lack reliable public and private transportation, which makes it much harder to commute for work and school, creating a cycle of economic isolation in their communities. 

Clarke noted that the Consumer Financial Protection Board (CFPB) during the Obama administration prioritized rooting out auto lending discrimination, and holding auto lenders accountable for discrimination under the Equal Credit Opportunity Act. Over the last few years, the CFPB has reached settlements with Ally Financial and Ally Bank, Honda Finance, Fifth Third Bank, and Toyota for their discrimination against African American borrowers and other minorities. 

Clarke called on Congress to enact robust legislation to increase protections for borrowers of color in the auto lending market, and to prohibit discretionary dealer markups. In addition, she advocated for Congress to require auto lenders to report the demographic information of their borrowers. 

Borrowers of color deserve to participate in the marketplace free from discrimination, yet, they face extensive hurdles in gaining fair and equal access to auto lending credit, which further threatens economic mobility and equality.

Read the full testimony here.