Newly uncovered internal memos reveal the Obama administration knowingly exaggerated charges of racial discrimination in probes of Ally Bank and other defendants in the $900 billion car-lending business as part of a “racial justice” campaign that’s looking more like a massive government extortion and shakedown operation.
So far, Obama’s Consumer Financial Protection Bureau has reached more than $220 million in settlements with several auto lenders since the agency launched its anti-discrimination crusade against the industry in 2013. Several other banks are under active investigation.
That’s despite the fact that the CFPB had no actual complaints of racial discrimination – it was all just based on half-baked statistics.
A confidential 23-page internal report detailing CFPB’s strategy for going after lenders shows why these companies are forking over millions of dollars in restitution and fines to the government despite denying any wrongdoing.
The high-level memo, sent by top CFPB civil-rights prosecutors to the bureau’s director and revealed by a House committee, admits their methods for proving discrimination were seriously flawed from the start and had little chance of holding up in court. Yet they figured they could muscle Ally, as well as future defendants, with threats and intimidation.
“Some of the claims being made in this case present issues, such as use of [race] proxying and reliance on the disparate-impact doctrine, that would pose litigation risks meriting serious consideration prior to taking administrative action or filing suit in district court,” the Oct. 7, 2013, memo addressed to CFPB chief Richard Cordray acknowledges.
“Nevertheless,” it added, “Ally may have a powerful incentive to settle the entire matter quickly without engaging in protracted litigation.”
At the time, the Detroit-based bank was seeking permission from the Federal Reserve to remain a financial holding company. Without regulatory approval, Ally risked losing key business lines, primarily its insurance subsidiaries.
“Protracted litigation” would present “a high hurdle” to Ally retaining such status, the CFPB lawyers conspired.
Prosecutors also sought to use the Community Reinvestment Act as leverage against Ally. At the time, the FDIC was reviewing the bank’s compliance with the anti-redlining law.
They huddled with FDIC and Federal Reserve officials to get them on board with their scheme; and the Fed assured them it would look favorably upon “a prompt and robust” settlement by Ally, while the FDIC confirmed that a quick resolution would help Ally pass its CRA exam.
So CFPB applied the screws to Ally, saying it had “statistical evidence” showing its participating dealers were “marking up” loan prices for blacks and Hispanics vs. whites (by an average of $3 a month). Ally fought back, insisting non-discriminatory factors, such as credit history, down payments, trade-ins, promotions and rate-shopping, explained differences in loan pricing. After conducting a preliminary regression analysis, the bank found these factors alone accounted for at least 70 percent of the “racial disparities” the government was claiming.
CFPB admits in the memo that it never considered these or other legitimate business aspects of the car deals it investigated: “Such factors were excluded as controls from the markup analysis.”
Also in its initial rebuttal, Ally complained CFPB’s entire case was based on “disparate impact” statistics, not actual complaints by consumers, and that those estimates relied on guesswork about the race of the borrowers. (The auto industry does not report borrower race, so CFPB tried to ID race by last name and ZIP code, a so-called “proxy” method that is wildly inaccurate.)
“The evidence of discrimination on the basis of race and national origin is strictly statistical,” the agency confessed in a report footnote.
With all these machinations hidden from public view, Cordray held a press conference to announce “the federal government’s largest auto-loan discrimination settlement in history.” He claimed that 235,000 minorities had been harmed by Ally, even though he didn’t know the race of a single borrower or whether they had actually been harmed.
“He had no idea how many actual victims there were because their whole case rested entirely on statistical estimations they admitted internally were inaccurate,” said a senior staffer for the House Financial Services Committee, which recently obtained the internal documents from CFPB.
In fact, CFPB still has not been able to definitively ID the race of any borrower it claims Ally victimized – which is why it has taken more than two years to send remuneration checks to alleged victims. Desperate to find them, the bureau recently had to mail 420,000 letters to Ally borrowers to coax at least 235,000 into taking the money, and to allow Cordray to save face.
Checks started going out this month to the fictitious victims – just in time for the election. So what if some recipients are white? They will all no doubt thank Democrats for the sudden, unexpected windfall of up to $520 in the mail.
There’s now a Masturbation Station in New York City for men to relieve some stress during the workday.
The company said 100 men used the booth on its first day.
On Tuesday, Hot Octopuss erected what it called a “GuyFi” booth on 28th Street and 5th Avenue in New York City, where men could, in theory, go to “relieve stress.”
The company simply put a cloth over a phone booth in what amounted to a marketing gimmick. Inside was a chair and a laptop.
Hot Octopuss was inspired by a Time Out survey, which concluded that 39% of the New York men it questioned admitted to masturbating while at work. A more expansive Glamour survey of 1,000 men in 2012 suggested 31% of its readers have done so.
Hot Octopuss created the booth so men can “take this habit out of the office and into a more suitable environment designed to give the busy Manhattan man the privacy, and the high-speed Internet connection, he deserves.”
“We may be insinuating that these booths could be used in whichever way anyone would like to ‘self soothe,’” a representative tells Mashable, “but the brand is not actively encouraging people to masturbate in public as that is an illegal offense.”
The company claims approximately 100 men used the booth on its inaugural day.
Wal-Mart is closing 269 stores, more than half of them in the U.S. and another big chunk in its challenging Brazilian market.
The stores being shuttered account for a fraction of the company’s 11,000 stores worldwide and less than 1 percent of its global revenue.
More than 95 percent of the stores set to be closed in the U.S. are within 10 miles of another Wal-Mart. The Bentonville, Arkansas, company said it is working to ensure that workers are placed in nearby locations.
The store closures will start at the end of the month.
The announcement comes three months after Wal-Mart Stores Inc. CEO Doug McMillon told investors that the world’s largest retailer would review its fleet of stores with the goal of becoming more nimble in the face of increased competition from all fronts, including from online rival Amazon.com.
“Actively managing our portfolio of assets is essential to maintaining a healthy business,” McMillon said in a statement. “Closing stores is never an easy decision. But it is necessary to keep the company strong and positioned for the future.”
Wal-Mart operates 4,500 in the U.S. Its global workforce is 2.2 million, 1.4 million in the U.S. alone.
Wal-Mart has warned that its earnings for the fiscal year starting next month will be down as much as 12 percent as it invests further in online operations and pours money into improving customers’ experience.
Of the closures announced Friday, 154 locations will be in the U.S., including the company’s 102 smallest-format stores called Wal-Mart Express, which were opened as a test in 2011.
Wal-Mart Express marked the retailer’s first entry into the convenience store arena. The stores are about 12,000 square feet and sell essentials like toothpaste. But the concept never caught on as the stores served the same purpose as Wal-Mart’s larger Neighborhood Markets: fill-in trips and prescription pickups.
Also covered in the closures are 23 Neighborhood Markets, 12 supercenters, seven stores in Puerto Rico, six discount stores and four Sam’s Clubs.
Wal-Mart will now focus in the U.S. on supercenters, Neighborhood Markets, the e-commerce business and pickup services for shoppers.
The retailer is closing 60 loss-making locations in Brazil, which account for 5 percent of sales in that market. Wal-Mart, which operated 558 stores in Brazil before the closures, has struggled as the economy there has soured. Its Every Day Low price strategy has also not been able to break against heavy promotions from key rivals.
The remaining 55 stores are spread elsewhere in Latin America.
Wal-Mart said that it’s still sticking to its plan announced last year to open 50 to 60 supercenters, 85 to 95 Neighborhood Markets and 7 to 10 Sam’s Clubs in the U.S. during the fiscal year that begins Feb. 1. Outside the U.S., Wal-Mart plans to open 200 to 240 stores.
The financial impact of the closures is expected to be 20 cents to 22 cents per diluted earnings per share from continuing operations with about 19 cents to 20 cents expected to affect the current fourth quarter. The company is expected to release fourth quarter and full year results on Feb. 18.
Shares of Wal-Mart Stores Inc. fell $1.12, or 1.7 percent, to 61.94 in morning trading.
Commercial spaceflight company SpaceX enjoyed a triumphal moment this evening, conducting its first-ever landing of a Falcon 9 rocket on dry land after a successful launch on Monday.
Livestreams from SpaceX’s headquarters showed employees breaking into cheers as the rocket touched down at Cape Canaveral Air Force Station, Florida.
Creating reusable rockets that can land and relaunch is considered a major technological milestone that will significantly lower the cost of space travel. Multiple space companies were competing to achieve this breakthrough, but SpaceX is the first to succeed in landing a rocket for a non-suborbital trip.
Unlike previous attempts, where SpaceX landed their rockets on ocean platforms, this was the first where the Falcon 9 rocket was able to land on dry ground.
The mission’s primary objective was commercial: the company had been commissioned to launch satellites for the New Jersey-based communications company OrbComm. This was also a success, with all 11 satellites now in orbit around Earth.
However, this will likely be dwarfed by the wider significance of SpaceX’s achievement, which has brought us a step closer to cheap, reusable rockets. As this technology develops, it will make recreational space travel, new manned expeditions to the Moon, and even to Mars, considerably more cost-effective.
It’s a welcome end to the year for SpaceX, which had to deal with a debacle in June when a Falcon 9 rocket exploded shortly after takeoff, destroying a supply shipment intended for the International Space Station. According to SpaceX, the explosion was caused by a failed strut in the rocket’s upper state liquid-oxygen tank.
SpaceX is led by Elon Musk, the billionaire founder of Tesla Motors. “It’s a revolutionary moment,” Musk told the press after the landing. “No one has ever brought a booster, an orbital-class booster, back intact.”
It’s unlikely we’ll be wandering around on Mars anytime this year. But the prospect of viable, low-cost, private sector space travel suddenly seems a little less sci-fi.