Ally Financial Settles With Government for $98 Million

Alan Zibel and Andrew R. Johnson, Wall Street Journal, December 20, 2013

The U.S. government reached a $98 million settlement with auto-lender Ally Financial Inc., marking the government’s biggest case against a lender for alleged discrimination in the car-loan market.

Ally, the third-largest U.S. auto lender, on Friday settled allegations by the U.S. Department of Justice and Consumer Financial Protection Bureau that the company discriminated against 235,000 minority borrowers by charging them higher interest rates.

Under the settlement, Ally will pay $80 million in compensation for victims of discrimination and $18 million in penalties. Consumers are expected to receive $200 to $300 on average, but the exact figure will depend on the amount of the interest-rate differences.

The action stems from a wide probe into discrimination in the auto-lending market, with officials scrutinizing several banks and auto-finance companies. Federal officials contend the industry’s system of making loans through auto dealers increases the risk of discrimination, even if unintentional, since dealers are able to add extra interest-rate charges to consumers as compensation for setting up the loan. Officials say the system provides a financial incentive for dealers to charge higher rates because they earn more compensation by doing so.

“Whether or not Ally consciously intended to discriminate makes no practical difference” for consumers, said CFPB Director Richard Cordray.

In the case of Ally, government officials said the company charged minority borrowers interest rates about 0.2 to 0.3 percentage point higher than those charged to white borrowers.

Ally won’t be required to eliminate the practice of allowing dealers to mark up loans under the settlement, but will have to show government officials it isn’t discriminating.


“Based on the company’s analysis of its business, it does not believe that there is measurable discrimination by auto dealers,” the company said.



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  • JohnEngelman

    I am confident Orientals paid lower interest rates because they are more likely to pay off their loans on time.

    • Anon

      Wherever did you get that idea? Perhaps the japanese might be like that…or perhaps not. There are different rules depending on who they are dealing with. But the chinese…filipinos….better be very careful who you lend money to.

      The dominant attitude among “orientals” is that rich people are rich and it is no big deal if you don’t pay them back. They will tell that to your face. But also, your responsibilities are different when dealing with your own race vs foreigners. That, they will NOT tell you to your face.

      It’s not a matter of honesty. It’s one of power. Oh, you who are so much richer than me, how greedy are you to squeeze money out of the poor when you have so much.

      Yeah…don’t lend money to these people, and certainly don’t do business with them. Give them money as gifts and don’t expect anything back. Even if they are richer than you…..the perception remains.

    • itdoesnotmatter

      John, copy, paste, and follow this link. http://files.consumerfinance.g
      Apparently Asians were also charged disparate interest rates according to witch hunt followed by scam procedures initiated by the DOJ. But, which Asians? Pakis, Iraqis? The govt is lax about delineating exact ethnicity when it suits their agenda.

    • odious liberal

      Please provide stats Mr. Wizard. Unlike you I actually lived and worked in East Asia for 35 years, Asians scam as hard as anyone.

      • JohnEngelman

        by Reuters Sep 18th 2013 4:22PM
        AlamyBy Margaret Chadbourn

        WASHINGTON — U.S. mortgage lending increased by 38 percent last year, boosted by significant refinancing activity, with white and Asian borrowers continuing to enjoy greater access to credit for purchases than blacks or Hispanics, regulators said on Wednesday.

  • Dave4088

    Enrique Holder and his shakedown artists at “Justice” strike again. I would hate to be in the lending industry because if you refuse to loan minorities due to poor credit it qualifies as discrimination. But if you loan them money, albeit at higher interest rates commensurate with the risk then it’s racial discrimination. One loses either way.

    An average of .02 to .03 percentage points is laughable and might amount to a few dollars per month, but doesn’t justify a multimillion dollar lawsuit. This is just the forcible confiscation and redistribution of wealth under the guise of fairness and “justice”.

    • PvtCharlieSlate

      Enrique Holder? Is he related to Algonquin J. Holder?

    • itdoesnotmatter

      Suffering the consequences for not paying bills and scoring the resultant poor credit rating is ray-ciss.
      Obongo’s minions are escalating the war against responsible White people, comrades.

  • Puggg

    What’s the problem? People with worse credit scores will have higher interest rates.

    • sbuffalonative

      Don’t give them a loan because they can’t qualify is redlining. Giving them a load when they don’t have the resources to pay it back is predatory lending. Get it?
      Damned if you do, damned if you don’t. The ghetto lottery. Heads they win. Tails you lose.

    • Greg Thomas

      True Pugg, but when those people with lower credit scores happen to be from our beloved diversity, lenders are not supposed to take notice of that fact. If you do, you will be branded a “racist,” and subject to court action as in this case.

  • Spartacus

    Car accidents are racist !

  • LeGrandDerangement

    How the government know the race of the borrower?

    • IstvanIN

      It is on the loan papers, I know I have taken out auto-loans.

      • LeGrandDerangement

        That occurred to me, I couldn’t remember if they asked on my last loan. I’m tempted to check off Aryan Superman next time, lol.

    • Alexandra1973

      The name may be a giveaway.

  • Ally Financial Inc., previously known as GMAC Inc. (an acronym for General Motors Acceptance Corporation), is a bank holding company headquartered in Detroit, Michigan, United States at Tower 200 of the Renaissance Center.

    The government fined a company in which it is the majority owner?

    This sounds more like skimming profits.
    Is Washington DC the new mob owned casino?

    The government can’t seem to understand that interest rate charged is based on risk.

    There are used car dealers that have their own showroom show that sell five/six/seven years old cars and finance for 108 months (nine years). Ally is probably writing a significant portion of the bonds sold to the street. Can you imagine still paying for a 2008 model car in 2023?

  • Nathanwartooth

    Did they control for credit scores or are credit scores racist now?

    • Massif1

      Credit scores are racist because paying on time – nobody got time that.

  • Massif1

    Another trick to give blacks more free money – probably for new rims for their whips. Black car dealers usually deal with black customers and process their paperwork. How’s that racist? Your own tribesmen are making money on you is not racist.

  • Anon

    An interesting argument. Because, in fact, the source of the discrimination is the government itself. All things being equal, the car lenders in “teh hood” are tacking on extra fees to the sale. Why? Because, unlike the negros they are selling to, they have to pay rent on the property their business is on, and that property, in every single black area, has outrageous levels of property tax. Such costs, inevitably get tacked on to the customer.

    So what’s going on here? The seller is telling their negro client, you can’t afford this car, but if you originate the loan through me, I will lower the cost of the vehicle and make up the difference in loan interest, which (unlike the principle) can be ballooned out for decades if necessary so you can afford the car payment (and keep paying it even after the car is a rusted out pile of junk). Of course, money is being lost left and right because, the typical negro thinks he makes one car payment and then never has to again. And the real fun starts when they discover he did not really know what his real telephone is, where he lives or even what his real name is. Not that the car seller cares. He’s long since collected his commission.

    So now Ally will being sending a letter to auto dealers making them do all sorts of red tape to make sure they ain’t discriminootin when selling their cars.

    But hey…..the rest of us won’t have to deal with quite so many escalades blaring “kill whitey” music. They’ll be taking the bus.

  • Alexandra1973

    In short, if they THINK you may be even THINKING racist thoughts, look out.

  • kenfrombayside

    It’s called the knee grow lottery.

    • kenfrombayside

      BTW, I don’t blame companies for sending jobs overseas.

      • Sick of it

        The corporations doing it are trying to flood our country with the scum of the world and support every socialist POS legislation flying through Congress at any point in time. Corporatism = our extinction.

  • bigone4u

    One small step at a time, Obama Democrats destroy any resemblence of a free market economy. Blacks and browns have no idea how businesses work at any level of sophistication above a lawn mowing service. It was frustrating to me to teach economics to classrooms full of them when the minority students (actually the majority where I taught) engaged in magical thinking.

    One of my Hispanic students was constantly getting into small car wrecks and claiming injury to collect settlements. It’s how she made her living. Another has since spent most of her life in jail for writing bad checks. Magical thinking. I have a blank check, I can fill in any amount I want.

    Obama and Holder have tenth rate minds, just like the students in question. These creatures are destroying us financially.

  • Strike_Team

    The last time I saw any stats on loans, whites were actually more likely to pay off loans than “Orientals” as some middle aged eternal student claimed. It was by small margin, around 1 or 2 %, but whites had a slightly lower default rate. Maybe that’s changed, but not likely.

    I sure would like to see the credit records and credit ratings of the aggrieved parties. Then compare those records to any upstanding white person’s.

    • IstvanIN

      Remember “Asian”, like “Hispanic”, covers a huge blob of races and ethnicities, every thing from Japanese to shady Pakistanis and Indians.

      • Strike_Team

        The stats I’m referring to were for E. Asians. The article was commenting on home and auto loans, and whites did in fact have the lowest default rate, but a narrow margin. Both whites and E. Asians were far below blacks and “Hispanics”, meaning non-white Hispanics.

  • Charles W.

    Welcome to the world of “discriminatory effect”.

    • IstvanIN

      The whole idea of “disparate impact” is insane. If I apply the same rules or goals or requirements to everyone and some can not meet those rules, goals or requirements how am I discriminating? Because some groups are too stupid or lazy to follow those rules or meet those goals or requirements? No,, because some judge or bureaucrat says I am discriminating. It is simple as that. If in fact freedom of association in business is illegal in this country than, at the very least we should be allowed to apply the same rules to everyone. I can not wait until a judge rules that 2 x 9 does not equal 18 because a significant number of blacks can not reach that conclusion.

      • DiversityIsDeath

        The only solution to disparate impact is for USA to keep lowering the standards, lowering the requirements to accommodate the dumbest and weakest and poorest among us. Down, down, down we go. Meanwhile China and India are doing just the opposite– RAISING the bar, skimming the cream, selecting the best and the brightest. Up, up, up they go.

  • Talltrees

    Merry Christmas!

  • ssviking

    Didn’t the government force banks and businesses to loan to unqualified minorities in the first place? So when these businesses try some common sense things to protect their butts they get sued anyway brings a whole new meaning to “only in america”

  • MBlanc46

    What a racket.

  • A Freespeechzone

    The auto dealers, when they write the contract, that is sold to the financing entity (i.e. Ally Financial, etc.), try to charge AS MUCH as they can on the contract.

    IF the car buyer is STUPID and doesn’t know the auto rates in the market, they have a good chance of being taken advantage of….

    This happens to White people too….Stupid people will ALWAYS end up paying the higher rates if they don’t know what they are doing…

    Such is life…and NOT discrimination….

    • GeneticsareDestiny

      “Stupid people will ALWAYS end up paying the higher rates if they don’t know what they are doing.”

      Yes. Life is an IQ test.

  • GeneticsareDestiny

    This is true. The only exceptions I can think of are industrial espionage and other forms of intellectual property theft.

  • RyanP

    This is getting so insane. You don’t even have to prove intent to discriminate based on race any more. Just using objective standards that have nothing to do with race is now an offence if the races are affected differently by those standards. I recall a recent story about an employer getting in trouble for using criminal background checks as part of the hiring process. I am sure you can guess why. “Disparate Impact” strikes again.

    • nick

      message to ally don t do the crime if you can t pay the fine!

    • Brian

      BMW didn’t want to hire felons, and the blahs complained it was rayciss because they like to commit felonies. Is that what you’re remembering?

    • MartelC

      its not getting insane- it’s getting very very profitable for a certain political class.

  • Ograf

    Yes Mr. Campbell, and the reason you were able to do that is because of racism and white privilege. You should feel guilty and buy some nice deserving welfare minority a car. You have no idea how much one suffers when his great , great grandfather was a slave. Where does it all end?

  • Sue

    “Whether or not Ally consciously intended to discriminate makes no
    practical difference” for consumers, said CFPB Director Richard Cordray.

    And the truth is no defense.

  • nobody

    East Asians, you mean the people who dump toxic sludge into their rivers, eat dogs and cats, and are nearly as backwards and superstitious as blacks are?

  • Greg Thomas

    Expecting diversity to pay their bills on time is now deemed “racist.”