WSJ Article Criticizes CFPB for Using “Mystery Shoppers” Who Find Evidence of Racial Discrimination

by Jeff Sovern

Here (behind paywall).  Excerpt:

In 2013, a loan officer at BancorpSouth Bank's Madison, Ala., branch received visits from two people with similar profiles within 10 days of each other, both saying they were first-time home buyers — one white, the other black. The employee allegedly steered the black customer to a smaller and more expensive loan, even though her stated income and credit score were higher than the white applicant's. * * *

"We have concerns with the way the information was collected, and selectively released," the Tupelo, Miss., bank said in a statement, adding that it has "zero tolerance for this type of behavior" from employees.

The CFPB's use of undercover investigators "is a worrisome precedent, because. . .we see more and more aggressive civil law-enforcement activity by the government, so that civil law enforcement borders on, if not bleeds into, criminal law enforcement," said Andrew Vollmer, a former deputy general counsel at the Securities and Exchange Commission who now teaches at the University of Virginia's law school. "What we do not have are the corresponding protections of the criminal law-enforcement system for the accused."

So let me get this straight: the CFPB sends in two similar loan applicants of different races who are treated differently.  And it's the Bureau that gets criticized. Incidentally, as the article reports, the bank agreed to a $10.6 million settlement with the Bureau and the DOJ, though it denied wrongdoing.

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