Wednesday, March 12, 2014

Discrimination at the CFPB

I loathe disparate impact theory but the CFPB loves it. The idea that people can be unconsciously discriminating, something that only shows up as a difference in results even though the process leading to the results was scrupulously fair is a favorite in those quarters.

Now the worm has turned and CFPB been bitten by disparate impact. A March 6 investigative report in American Banker uncovered the fact that whites were twice as likely to be rated highly as minorities in employee reviews. No employees would speak on the record for fear of retaliation. Four days later CFPB scrapped their employee rating system. Sudden changes like this to employee rating systems invariably tank morale as everybody looks with suspicion at their next pay raise rate and wonders whether their paycheck is a victim of political correctness.