WASHINGTON — Republican members of the House Financial Services Committee continued hammering the Consumer Financial Protection Bureau's targeting of dealer participation. This time, members released internal bureau documents showing that some settlement checks being dispersed as part of the CFPB’s $98 million settlement with Ally Financial and Ally Bank have gone to white borrowers.

Release by Republican committee members this week, the documents reveal that settlement checks were issued without recipients being properly verified.

“Sending remuneration checks to white borrowers as a means of remedying alleged discrimination against African-American, Hispanic, and Asian borrowers is an unorthodox approach to fair lending enforcement, to say the least,” read the report from Republican committee member.

Based on the group's finding, Committee Chairman Jeb Hensarling (R-TX) asked Attorney General Loretta Lynch to immediately suspend distribution of the settlement until she had “certified that all claimants have verified their eligibility in writing under penalty of perjury.”

According to the released documents, the Department of Justice originally proposed to the CFPB a distribution method that “provides strong protection from criticism that we are giving damages to non-Hispanic white borrowers." That method, however, would limit the number the number of recipients to between 36,000 and 143,000 consumers — much lower than the 235,000 consumers the CFPB alleged were harmed by Ally dealer markup policy.

“Political exigency required the bureau to design a process that would ensure that a sufficient number of alleged victims would be identified as eligible claimants; after all, if fewer claimants received checks than Director [Richard] Cordray initially announced, the validity of the bureau’s disparate impact methodology would be called into question," the report by Republican staff noted. "But, as internal documents reveal, bureau officials knew that in order to generate a sufficient number of check recipients, they would have to remove a number of safeguards from the claims process, including confirming the race of claimants alleged to have been discriminated against, thus making it more likely that non-minority consumers would receive remuneration."

The staff report is the second released by the committee on the CFPB's enforcement actions against vehicle finance sources. The first report, released in November, revealed the bureau pursued its potentially "market-tipping" enforcement action against Ally even through internal bureau documents revealed the statistical method used in the CFPB's case against Ally was "prone to significant error." It also revealed the bureau was able to secure its settlement with Ally because of "undue leverage" — Ally needed Washington regulators' approval for a broader restructuring of its business.

Assistant Director Patrice Ficklin is expected to testify before the Financial Services Subcomitte on Oversight and Investigation in early February during a hearing on the bureau's auto lending supervision, enforcement and rulemaking.