Senators Elizabeth Warren & Sherrod Brown push for Apple Card probe by CFPB

Posted:
in General Discussion edited December 2019
Senators Elizabeth Warren and Sherrod Brown are amping up their attacks against Apple Card partner Goldman Sachs' alleged gender bias for applicants, pushing the director of the Consumer Financial Protection Bureau to examine the claims for violations of fair lending laws.




Shortly after stories claiming there to be an algorithmic issue with Goldman Sachs' credit limits for Apple Card, Senators publicly objected to the perceived bias which led to men being offered limits multiple times the size of those provided to women. In a letter to the CFPB, Senators Warren and Brown double down on the matter, and call for the entity to look into matters.

Shortly after the reports surfaced, Goldman Sachs issued a statement claiming all scores were individually calculated, but that it would also reevaluate credit line limits for customers who expected higher offers.

The letter recaps the reports of Apple Card's launch, including Goldman Sachs CEO David Solomon's description of Apple Card as "the most successful credit card launch ever," before discussing how women were offered lower credit terms than men with similar circumstances. The letter highlights Apple co-founder Steve Wozniak's claim he received an offer for ten times the credit limit of his wife, despite sharing the same assets and accounts, and with his wife having a better credit score.

Pointing out the New York State Department of Financial Services has deemed the complaints warrant an investigation into the Goldman Sachs algorithm and whether the decisions it makes "violates state law on the basis of sex," Warren and Brown suggest the CFPB should do the same due to the Equal Credit Opportunity Act it enforces making it unlawful to discriminate "on the basis of race, color, religion, national origin, sex or marital status, or age."

The reports "underscore the importance of the CFPB adequately monitoring the lending practices of financial institutions, including those like Goldman Sachs, that are new to the consumer lending space," the letter states. However, it is unclear how the CFPB evaluates risks for new products and lenders, due to how it "determines its examination schedule based on an assessment of the risks to consumers."

The letter goes on to question about regulatory changes under the Trump administration "have hobbled its role enforcing fair lending laws," such as the stripping of enforcement powers for its fair lending office in 2018. The move "substantially undermined the ability of the Bureau to enforce fair lending laws and has resulted in an opaque structure that leaves it unclear as to who in the Bureau is responsible for handling matters," the senators claim.

"We're concerned that this new structure, where many offices have varying degrees of authority, may allow new potentially discriminatory products to get to market without adequate oversight," the two suggest, before accusing CFPB Director Kathleen Kraniger of allowing the bureau to show "little willingness to fulfill its statutory mandate to enforce lending laws."

Warren and Brown then ask a lost of questions to determine "whether Apple Card faced adequate scrutiny before going to market and in the wake of the allegations related to the Apple Card's terms," as well as how regulatory changes have affected the effectiveness of the bureau.

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Comments

  • Reply 1 of 61
    Supposedly there is a stat that charges more interest for some females than males, and Congress gets involved because that's discriminatory.  Meanwhile since the invention of auto insurance 16 year old boys are charged more than 16 year old girls because stats show there is a reason...and that's acceptable.  


    Just gonna grab my popcorn and watch this one unfold.    
    stompydedgeckourahararazorpitsocalbrianbigtdssteven n.Above_The_Godscornchipwatto_cobra
  • Reply 2 of 61
    The chances for tЯump’s version of the CFPB taking action on this are between zero and none. The bureau exists in name only right now. 
  • Reply 3 of 61
    This is about getting your name in the news.
    llamalkruppentropysSnickersMagoourahararazorpitleavingthebiggsocalbriancat52newBeliever
  • Reply 4 of 61
    bonobob said:
    The chances for tЯump’s version of the CFPB taking action on this are between zero and none. The bureau exists in name only right now. 
    IMO, highlighting the lack of activity by Trump's version of the CFPB is probably the main point.
    mystigocornchip
  • Reply 5 of 61
    crowleycrowley Posts: 10,453member
    airnerd said:
    Supposedly there is a stat that charges more interest for some females than males, and Congress gets involved because that's discriminatory.  Meanwhile since the invention of auto insurance 16 year old boys are charged more than 16 year old girls because stats show there is a reason...and that's acceptable.   
    Yeah?

    16 year old boys crash cars more often.

    Where’s the stat that says women are worse at paying off credit cards?
    napoleon_phoneapartgatorguybonobobgutengelSolianantksundaram
  • Reply 6 of 61
    sdw2001sdw2001 Posts: 18,020member
    "The letter goes on to question about regulatory changes under the Trump administration" 


    Gee, I never would have guessed they'd throw that in there.  

    cornchiprazorpitJWSC
  • Reply 7 of 61
    rob53rob53 Posts: 3,263member
    I still think Goldman Sachs is using the traditional method of a credit report based in each individual regardless of marriage status. I put my wife’s name as the primary card holder on a couple credit cards so she could gain some credit report points. It has worked in the reverse since we separated and I retired. She gets the benefit of all the on time payments I made and the credit card longevity while I had to get a brand new credit card with zero years. It works both ways 
    cat52
  • Reply 8 of 61
    MplsPMplsP Posts: 3,965member
    I heard an interesting podcast the other day about this (https://www.marketplace.org/shows/marketplace-tech/human-biases-are-baked-into-algorithms-now-what/) Bottom line, even if the algorithm doesn’t directly consider gender as one of its parameters, it’s very possible for it to be biased for a multitude of reasons. That bias may be intentional, or completely unintentional. The presence of bias in the algorithm’s results doesn’t automatically mean Goldman Sachs is trying to discriminate, but the lack of intent doesn’t mean there’s nothing to fix, either.

    Unfortunately, I fear there will be more political points scored on this than actual substantive discussion and progress.
    netroxSnickersMagoowatto_cobra
  • Reply 9 of 61
    crowley said:
    airnerd said:
    Supposedly there is a stat that charges more interest for some females than males, and Congress gets involved because that's discriminatory.  Meanwhile since the invention of auto insurance 16 year old boys are charged more than 16 year old girls because stats show there is a reason...and that's acceptable.   
    Yeah?

    16 year old boys crash cars more often.

    Where’s the stat that says women are worse at paying off credit cards?
    Not in my house.  Marrying my wife is the best financial decision I ever made.

    (and I am so grateful to her for that... and I love her for other reasons, too, like her smile, the way she makes me feel when I see her, the way she holds my hand, ...)
    Soligatorguywatto_cobra
  • Reply 10 of 61
    thrangthrang Posts: 1,015member
    "Based on recent new reports..." Was it three people? Maybe 4? What a deep and sound basis for an investigation. Its the lack of a shared card that is the issue. I'm guessing men are the ones handling most banking and credit responsibilities for a household, so they are probably the ones (generally) with better credit history (as they are probably the ones applying for credit or listed as primary on shared accounts) If there several examples of women who maintain the primary financial management role in a marriage that still are offered worse credit then their male spouses with Apple Card, then wake me up...
    edited November 2019 cornchipcat52watto_cobra
  • Reply 11 of 61
    crowley said:
    airnerd said:
    Supposedly there is a stat that charges more interest for some females than males, and Congress gets involved because that's discriminatory.  Meanwhile since the invention of auto insurance 16 year old boys are charged more than 16 year old girls because stats show there is a reason...and that's acceptable.   
    Yeah?

    16 year old boys crash cars more often.

    Where’s the stat that says women are worse at paying off credit cards?
    Here you go:
    https://www.foxbusiness.com/features/credit-card-debt-is-a-bigger-problem-for-women-vs-men
    uraharacat52watto_cobra
  • Reply 12 of 61
    steven n.steven n. Posts: 1,229member
    crowley said:
    airnerd said:
    Supposedly there is a stat that charges more interest for some females than males, and Congress gets involved because that's discriminatory.  Meanwhile since the invention of auto insurance 16 year old boys are charged more than 16 year old girls because stats show there is a reason...and that's acceptable.   
    Yeah?

    16 year old boys crash cars more often.

    Where’s the stat that says women are worse at paying off credit cards?
    A 2015 National Debt Relief Survey showed exactly that. Most studies have shown women tend to carry higher debt loads than men (on average) and that could, on average, result in outcomes that look biased. Women tend to have better on time payment records and at the same time, slightly higher default rates.

    Oddly, late payments (but paying it off) is much more profitable to the CC issuer than on time but defaulting.

    That said, are credit limits biased? Absolutely. Otherwise everyone would get the same exact limit. Let that sink in. They are biased for a reason. They are not 100% egalitarian with everyone getting the same exact outcome. 
    stompycornchipcat52llamaJWSC
  • Reply 13 of 61
    the algo is pretty simpel yes credit score plays a role but your monthly income and personal wealth play a much more important role then credit score alone, Americans where caught watching credit score as the default way to get limits, but it's more complex then that. So Warren please fix the income difference that's what the real issue is ...
    smiffy31
  • Reply 14 of 61
    larryjwlarryjw Posts: 1,031member
    What I'd like to see is the criteria used by all the rating agencies, and issuers of credit cards in determining credit worthiness. 

    The computer code for these decisions should be open sourced. 

    At this point, I'd suggested none of us know. We're just pulling stuff out of the air. 

    Analysis of this would likely lead to diagnosing implicit biases as we've seen reported on recently regarding health care criteria. 

    All these potential biases need to be outed, especially as they are being incorporated into "deep learning" and automated systems. 
  • Reply 15 of 61
    apple ][apple ][ Posts: 9,233member
    Garbage claims with zero proof to back any of them up, therefore no basis for any investigation.

    Numbers are numbers and some females will have worse credit scores than males and vice versa.

    Not everything in life is going to end up equal for everybody and nor should they. Men and women are not identical and nobody should expect their credit ratings to be identical either.


    cat52
  • Reply 16 of 61
    apple ][apple ][ Posts: 9,233member
    crowley said:
    Yeah?

    16 year old boys crash cars more often.

    Where’s the stat that says women are worse at paying off credit cards?
    Women have more debt than men, including student loan debt, auto loans, credit card debt and medical debt, therefore it makes perfect sense that this group of borrowers would have lower scores than another group (men) that has lower debt across the board.

    Women currently owe more than men in a number of key categories, including the following:
    https://www.usatoday.com/story/money/personalfinance/2018/10/17/wage-gap-debt-gap-women-income-disparity/38145305/

    Credit worthiness should be judged on numbers alone and if a woman's numbers suck, then they shouldn't complain about it because fair is fair and people must face the consequences for all of their decisions and habits. 
    edited November 2019 steven n.uraharacornchipcat52
  • Reply 17 of 61
    steven n.steven n. Posts: 1,229member
    temperor said:
    the algo is pretty simpel yes credit score plays a role but your monthly income and personal wealth play a much more important role then credit score alone, Americans where caught watching credit score as the default way to get limits, but it's more complex then that. So Warren please fix the income difference that's what the real issue is ...
    Are you asking Warren to tyrannically force women to make different life choices and force them into different carriers?
    entropyscat52
  • Reply 18 of 61
    apple ][ said: Women currently owe more than men in a number of key categories, including the following:
    Those numbers don't provide a reason for someone receiving 1/2 the credit limit though. Credit card companies want people to carry debt. That's the whole point of providing the cards, i.e., raking it in on the exorbitant  interest rates. 
  • Reply 19 of 61
    thrangthrang Posts: 1,015member
    apple ][ said: Women currently owe more than men in a number of key categories, including the following:
    Those numbers don't provide a reason for someone receiving 1/2 the credit limit though. Credit card companies want people to carry debt. That's the whole point of providing the cards, i.e., raking it in on the exorbitant  interest rates. 
    Yes, I'm sure if you were a million dollars in debt, you're considered an ideal candidate to get even more credit line...

    Your total credit exposure across all lenders, as well as your percentage of debt against that total line of credit, are not insignificant factors in applying for additional credit
    edited November 2019
  • Reply 20 of 61
    Can you imagine her as President? She’d destroy the economy.
    razorpitcat52apple ][bigtdsJWSCc.m.w.chabig
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