The former CEO of Ally Financial Inc. says the Obama administration abused its power by holding the bank’s business hostage in order to coerce a record settlement of “trumped-up” racism charges and push profit-killing new regulations on the entire auto-lending industry.
The huge $100 million deal has spooked several other major lenders into resolving similar race-bias charges and offering below-market rates to minorities for car loans.Michael A. Carpenter, who helmed Detroit-based Ally from 2009 to 2015, complained in an exclusive interview that Obama’s powerful consumer watchdog agency threatened to derail the bank’s efforts to obtain key regulatory approvals if it didn’t agree to settle the allegations out of court.
“To be strong-armed by a regulator was inappropriate to say the least,” he said.
“They absolutely knew they had tremendous leverage over us.”
Since the 2013 deal, the Consumer Financial Protection Bureau has accused the industry’s biggest lenders of ripping off black and other minority customers by charging them higher interest rates than whites.
But Carpenter says there’s no merit to the accusations.
He suggests they’re merely a means to a political end: forcing car dealers to abandon discretionary pricing and equalizing credit outcomes, regardless of borrower creditworthiness.
He warns moving to flat-rate financing, as the administration wants, would limit the industry’s ability to make a profit and cover risk and would be like “signing our own death warrant.”
Read on!
No comments:
Post a Comment