Flawed Study Falsely Accuses Nissan Finance Arm of Bias

     - Two Additional Analyses Finds Plaintiffs' Report Relies on Flawed
               Assumptions from Bad Data, According to Nissan -

    GARDENA, Calif., July 17 Flawed assumptions, bad data, and
shaky legal theory taint the plaintiff's studies of Nissan Motor Acceptance
Corporation (NMAC) lending practices, according to law Professor Richard A.
Epstein of the University of Chicago and Dr. Harold Black, professor at the
University of Tennessee.  Their analyses were released today by NMAC to
support its position in the Cason v. NMAC lawsuit now being heard in
Nashville, TN.  NMAC strongly emphasizes that its lending practices are
completely transparent and bias-free.

    Several serious errors highlight the plaintiffs' study performed for trial
attorneys by Professor Ian Ayres of Yale Law School.  Most importantly,
Epstein noted, NMAC's credit transactions are all routinely completed on a
colorblind basis in highly competitive credit markets, which leaves no room
for bias.  By law, NMAC is not allowed to inquire about the race of loan
applicants.  That is why Epstein reports that imposing responsibility on NMAC
in this suit poses a great risk of a false finding of discrimination, that
could cause a major disruption of credit markets.

    Dr. Black reports that the previous study by Professor Mark A. Cohen of
Vanderbilt University, demonstrates a lack of knowledge of automobile
financing decisions as evidenced by his ad hoc models, and Cohen never
addresses the fundamental issue whether the plaintiffs suffered discrimination
either from NMAC or the dealer, Action Nissan.  An additional question of
credibility raised by Black, is why Cohen didn't retain his statistical
analyses and the programs used to produce the output so his findings could be
corroborated.  His analysis of the report is that it is a statement of Cohen's
opinions without corroborating evidence or basis in real-world economics.

    Both analysts came to similar conclusions on the Ayres report.  Epstein
argues the methodology championed by Professor Ayres should be rejected in
these cases for a multitude of reasons:

    *  No difference in treatment among similarly-situated consumers.  The
       plaintiffs argue that the law allows them to ignore all factors that
       explain why different customers with different credit may receive
       different interest rates.
       Fact:  The plaintiffs' view fails to account for the fact that the law
       does not prevent NMAC from analyzing the creditworthiness of applicants
       based on neutral factors unrelated to race.

    *  No financial harm to persons of any race.  The plaintiffs' experts
       claim that NMAC collects from the dealer an extra sum equal to the
       "discretionary" markup paid to the dealer.
       Fact:  The dealer and the customer negotiate the contract before NMAC
       buys it.  The amount that plaintiffs paid on their contract was fixed
       in their credit transaction with the dealer and was not increased in
       any way when their contract was sold to NMAC.

    *  Strong competition among banks and finance companies.  The plaintiffs'
       experts all write as though dealers are required to assign all of their
       financing contracts to NMAC.
       Fact:  This analysis ignores the simple business necessity that
       drives the entire deal: NMAC and other finance companies must pay
       dealers to acquire credit contracts, it is a competitive business in
       which it is not predetermined that NMAC will be able to buy any certain
       contract.

    *  Mischaracterization of the relationship between NMAC and independent
       dealers.  The plaintiffs mischaracterize the relationship between NMAC
       and independent dealers, erroneously assuming that car dealers work for
       NMAC and not for themselves.
       Fact:  Dealers are independent from NMAC.  NMAC does not pay dealers
       any mysterious unearned money that is now available to be refunded to
       the plaintiffs.  NMAC used that money to pay dealers to acquire credit
       contracts.

    Dr. Black found fault with the Cohen report in a number of areas and
supported the findings of Dr. Janet Thornton a research expert initially hired
by Nissan to review the Cohen report:

    *  Missing computer programs and data output.  Cohen failed to retain all
       of the computer programs and computer output that were generated as
       part of his analysis.
       Fact:  This failure to retain records violates the accepted academic
       principle that an economist must preserve his work so that the analysis
       can be repeated and verified by another economist.  Cohen's report
       would be summarily rejected as inadequate by any reputable scholarly
       journal.

    *  Failure to investigate discrimination.  Cohen assumes discrimination by
       NMAC without even looking at the plaintiffs' credit situation.
       Fact:  NMAC's expert economist, Dr. Janet Thornton, did investigate
       whether the plaintiffs were discriminated against and found no evidence
       of discrimination by either the dealer or NMAC.

    *  Exaggerated Results.  Cohen reports his statistical findings as
       national in scope and draws nationwide conclusions about the alleged
       existence of race discrimination.
       Fact:  Cohen reports the results of a regression model for only one
       state -- Maryland.  His sweeping conclusions about widespread
       discrimination remain untested and unsubstantiated.

    Black notes that Dr. Cohen, either intentionally or not, misleads the
reader in asserting that his efforts were exhaustive and the results are
applicable to a broad geographical base.  He is also misleading the reader
when he implies that the absence of blacks from special programs is a result
of an intentional omission.

    Epstein argues the plaintiffs' conclusions, if carried forward into
lending policy, could devastate the credit markets for all consumers.  He
reports that the entire structure of the credit industry will be transformed
for the worse if this standard transaction exposes NMAC to huge financial
liabilities in this lawsuit.  If NMAC -- or other auto financial companies --
cannot pay dealers to obtain contracts, then it will no longer be able to
compete with other lenders and finance companies in this market.  NMAC will be
forced out of business.  The result will be less competition and less credit
for all consumers.

    Based on these findings, Epstein and Black conclude the plaintiffs are
wrong.

    Richard A. Epstein is the James Parker Hall Distinguished Service
Professor of Law at the University of Chicago.  He has been an editor of the
Journal of Legal Studies and, presently, of the Journal of Law and Economics.
His academic work has covered the fields of contracts, anti-discrimination
laws and credit transactions, including an understanding of the economic
forces that shape legal transactions.

    Harold Back is the James F. Smith, Jr. Professor of Financial Institutions
at the University of Tennessee, Knoxville.  Dr. Black lectures and publishes
extensively in the areas of financial institutions and the monetary system.
He served as Deputy Director of the National Credit Union Administration and
has been an advisor to the Federal Deposit Insurance Corporation.