Will the U.S. Supreme Court pave the way for the automobile financial bubble to burst? If the 1964 Title VII law is interpreted as subprime target practice toward certain minorities, then sell your big financial securities sector stocks because this will only be the tip of the iceberg. We reviewed various aspects of financial restitution that could be enforced as a retroactive fine as far back as 2000.

The courts have put limits on liability for disparity cases but the CFPB will be filing new charges that could reset these limits. Last week American Banker reported on statistics from the CFPB showing potential evidence of race discrimination within the agency.

If the CFPB finds that minorities are statistically more likely to be charged a higher interest rate for a particular financial services product or program, the CFPB may declare that product or program discriminatory. The disparate impact theory does not require any evidence of discriminatory intent on the part of the lender. Ronald Rubin, a former CFPB enforcement attorney, recently explained the CFPB's use of disparate impact theory in relation to indirect lending by car dealers.

"There's a feeling in the industry that anything based on disparate impact is about to be wiped off the face of earth by what's going on in the court system," Christopher Willis, a partner with Ballard Spahr LLP, said Tuesday at the Auto Finance Risk & Compliance Summit in San Diego. That feeling is based on what the court may do in a closely watched housing discrimination case, with a decision due by the end of June. However, even if the auto finance industry gets its wish in the housing case, there's no way the CFPB would abandon the disparate impact theory in auto finance, Willis said.

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