Why Does the CFPB Want to Curb Auto Lenders’ Discretion to Charge Higher or Lower Interest Rates?

On July 14, 2015, the Consumer Financial Protection Bureau (“CFPB”) and Department of Justice (“DOJ”) announced they had reached a “groundbreaking settlement” with American Honda Finance Corporation (“Honda”). The settlement resolves allegations that Honda engaged in racial discrimination by charging higher interest rates on auto loans to minority borrowers. But what is the legal basis for the CFPB’s supervision of auto lenders? And what methodology did the CFPB use to establish the connection between discretion in interest rate markups and racial discrimination in auto lending?