The sparring between lawmakers and the Consumer Financial Protection Bureau’s Richard Cordray continued on Thursday when the director offered his semiannual report to the U.S. Senate Banking Committee.

What has been a source of much consternation percolating from the upper chamber’s counterparts in the U.S. House germinated during the second of two Senate committee hearings this week that focused on the CFPB and its work, especially in auto finance.

As first mentioned by the American Financial Services Association through its weekly Newsbriefs, an edgy exchange between Cordray and Sen. Tom Cotton began when the Arkansas Republican received his turn to question the bureau’s boss more than an hour into Thursday’s hearing. Cotton focused his attention on the CFPB’s 2013 settlement of fair lending claims against Ally Financial; an action that’s been questioned in multiple reports by the House Financial Service Committee.

Cotton referenced an online tool available from the Wall Street Journal aimed at mimicking, to a degree, the statistical likelihood formula the CFPB uses to determine the ethnicity of individuals who might be impacted by discrimination by Ally or any other auto finance provider that falls under the CFPB’s jurisdiction — better known as larger participants that originate more than 10,000 vehicle installment contracts and leases per year.

The Arkansas lawmaker said he used the information he gathered about Sen. Richard Shelby — an Alabama Republican and committee chairman — and Sen. Sherrod Brown — an Ohio Democrat and ranking member. Cotton indicated that the tool that leverages surnames and ZIP codes projected that there was an 89 percent likelihood Brown was a member of a protected class and a 70 percent chance Shelby was, too. Cotton added that the tool suspected at a rate of 88 percent that he, too, was a member of a protected class.

For the record, Brown, Shelby and Cotton are all white males.

Cotton peppered Cordray with a series of yes-or-no oriented questions aimed at confirming how the CFPB determined the amount of consumers harmed by Ally’s practices and how these borrowers would be able to secure restitution from the pool of $80 million included in Ally’s settlement with the bureau.

When confronted with the results of Cotton’s experiment and asked to explain how the process unfolds, Cordray said, “In each of those examples, they would have had to affirmatively opt-in. They would have to respond and state that they were a minority borrower.

“I assume that each of you would not do that otherwise you’re committing fraud,” Cordray continued while pointing to each of the lawmakers.

“They were charged a higher rate based on a pattern of practices that systematically showed minorities in certain categories paid higher rates,” he added.

Cotton and Cordray then began talking over each other before the CFPB director’s voice rose enough that the lawmaker paused.

Cordray asked, “What do you do for those 325,000 consumers? Do you set up a system that’s difficult for them to comply with and get their money? Or do you set up a system that’s reasonable to comply with and get their money?

“If there turns out to be a systematically large number of people who fraudulently got checks under the settlement that’s something we’ll take very close account of and consider responding to,” Cordray continued. “But 325,000 people did qualify for appropriate redress here. I haven’t seen the large number of fraud cases. It’s all been hypothetical and people have an apprehension.”

Cotton finally interjected, “But your model is hypothetical.”

Cordray replied, “But there’s nothing hypothetical about 325,000 consumers who were systemically discriminated against.”

Cotton then wondered if the CFPB’s form to impacted Ally contract holders included provisions to prevent fraud such as confirmation of ethnicity would be subject to perjury charges if proven to be false.

Cotton asked, “Did the Department of Justice recommend that you had to opt-in under penalty?’

“We worked with the Justice Department,” Cordray replied

“This is routinely required on federal forms,” Cotton retorted.

“We’re not doing something different than the Department of Justice in this case. We’re working together. We’re on the same page,” Cordray said.

Cotton then questioned, “Did you personally decline the Department of Justice’s recommendation that a penalty of perjury would be attached to such a statement?”

Cordray retorted, “I don’t believe I did. I’d be happy to have my staff follow up with you.” That CFPB staff totaled 1,486 members as of Sept. 30, according to Cordray’s opening testimony.

As Cotton’s allotted time expired, Cordray reiterated, “I stand by and believe this was a reasonable approach to how to get relief to hundreds of thousands of consumers who were discriminated against under the disparate impact theory that I know some people disagree with but the Supreme Court has reaffirmed it is the law of the land.

Before yielding back to Shelby, the committee chairman, Cotton said, “Well 330 members of the House of Representatives, including many members of the Congressional Black Caucus, disagree.”

The entire Senate hearing featuring Cordray can be viewed here.