For all the politics that surround it, a CFPB inquiry into ways
to reduce consumer-finance discrimination opens a path to substantive and even structural change across the spectrum of retail-financial products.

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On July 28, the Bureau of Consumer Financial Protection (CFPB) issued a request for information (RFI) on ways to rewrite its rules to increase financial inclusion.  As a FedFin report made clear, the RFI is thoroughly inconclusive.  Indeed, it may well have been rushed out ahead of hearings last week, here and here, at which Director Kraninger surely knew she would be put through the racial-equity wringer.  But political though this RFI may be, it’s still a game-changer.  With a clear understanding of who across the consumer-finance spectrum wants what and why, the Bureau in 2021 will be armed for action on at least two critical long-pending issues redefining consumer finance no matter who wins the White House.

  • Artificial Intelligence and Machine Learning: How AI and ML are deployed in credit underwriting is a source of tremendous uncertainty for lenders hoping to add efficiency and increase inclusion without regulatory peril and reputational risk.  Critics including senior Senate Democrats fear that factors such as educational data lead to discriminatory credit policy.  So far, advocates on all sides of AI underwriting have responded to specific proposals, usually with enough opposition to forestall action.  Now, the CFPB has asked for proactive, forward-looking comments and, with these in hand, it will proceed no matter who’s in charge next year.
  • Federal Preemption: The RFI also seeks views on a more expansive approach to federal preemption than the Bureau has adopted so far.  Once set for anti-discrimination rules, the scope of federal preemption will also determine action on issues ranging from data ownership to personal privacy to electronic-payment consumer protection.  With so much power, any Bureau director will surely make use of it.


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