by Jeff Sovern
Tonight marks the start of the NFL draft, a time when hope blooms for all fans of an NFL team, because they can always suppose that their team has used the draft to get better–and many teams will. Many fans create wish lists–what they want for their teams. In that spirit, I have a wish list of what I want in consumer protection. One item would shed significant light on whether discrimination actually occurs in lending. I wish the CFPB would work with the credit bureaus to create records on imaginary individuals. These individuals would each be paired with another fictitious person with an identical or nearly identical record, except that one of the two would appear to be a white male, and the other either a person of color or a woman or both. The credit files would not actually indicate race or gender, but would signal such characteristics through zip codes, names, etc. Then the Bureau would have the imaginary people apply for credit. By comparing the applicants' grant and denial rates, and, for those who are offered credit, the terms of the offer, the Bureau would go a long way to showing that discrimination does or does not occur in the granting of credit.
To be sure, this would require making false statements to lenders, which might violate federal law. Perhaps the relevant laws have exceptions for such experiments; if not, the remedy would be to seek enactment of such an exception, which seems unlikely to happen in the current environment, but you never know. The idea is not very different from the testers that have been used to determine if realtors and others are engaged in housing discrmination.
What's on your consumer protection wish list?
