What a clever fraud by our own government.

Holder Shakes Down 'Racist' Banks For Nearly $1 Billion

An Editorial from INVESTORS.com

Posted 01/15/2014 06:40 PM ET

War On Banks: Attorney General Eric Holder has opened up a new front against car lenders and has forged an alliance with the Consumer Financial Protection Bureau to frame them for racism, too.
We don't use the term "frame" capriciously, certainly not like Holder uses the charge of racism.
His department and the president's new consumer credit watchdog agency, CFPB, have announced a new settlement with Ally Bank for nearly $100 million.

It's the largest fair lending deal against the auto industry and the third-largest ever to resolve charges of lending discrimination.

Throw in four new mortgage-lender settlements over equally groundless allegations — including last month's $35 million joint Justice Department-CFPB hit on Cleveland-based National City Bank — and the total financial industry shakedown by this administration now stands at an eye-popping $810 million.

In its complaint against Ally, Justice alleged that the bank "charged African-American borrowers more than white borrowers in interest-rate markups not based on creditworthiness or other objective criteria related to borrower risk."

It says a statistical analysis of loans conducted by CFPB researchers found a "disparity" of 29 basis points compared with rates charged "similarly situated" white borrowers.

The surcharge is so "statistically significant," it contends, it can't be a function of anything but racism.

Let's unpack that statement, because it contains a big load of rubbish.

For starters, Justice had to guess the race of Ally's black customers from Census data for black neighborhoods. The auto-finance industry does not report the race of borrowers like the mortgage industry.

"Ethnicity data is not available," the department confesses later in the complaint.

So "victims" were never actually identified. That's why the complaint has to estimate that Ally discriminated against "approximately" 100,000 African-American borrowers.

More shocking, civil-rights prosecutors never actually checked the creditworthiness of those borrowers. That's right, they never looked at credit scores, down payments, debt or other key risk-related factors banks consider to set interest rates. Not for blacks, or for supposedly "similarly situated" whites.

So how in the world can Justice claim "Ally's specific policy and practice are not justified by a legitimate business need?"

It really can't. That's why it relies on statistics to "prove" such policies had a "disparate impact" on minorities, while arbitrarily finding those disparities so "significant" they can't be explained by chance.

Arbitrary, because neither Justice nor CFPB will reveal its threshold for "significant," despite repeated bipartisan requests from Congress.

What a clever fraud by your own government.

Ally says it's guilty of nothing more than pricing for risk, a legitimate business practice common in the industry for centuries.

"Ally has treated all of its customers fairly and without regard to race or national origin," the Detroit-based financial institution asserted in a statement.

So why did it roll over?

The same reason the other 30 banks targeted by Holder have played dead: to avoid a protracted legal battle with the federal government and protect their all-important corporate brand.

Their names would have been dragged through the liberal media mud, as they publicly fended off charges of racism and boycotts by Rev. Al Sharpton and other racial arsonists working in concert with Holder.

"Ally enters this settlement for the purpose of avoiding contested litigation with the Department of Justice and to instead devote its resources to serving its customers," the company said. It's not admitting anything.

Ally is a victim of the same "disparate impact" witch hunt that has targeted mortgage lenders, a scurrilous and systematic demonization of corporate America that's only growing in scope and intensity in President Obama's second term.