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House Committee Votes to Repeal CFPB Auto Lending Guidance

June 12, 2014

WASHINGTON, D.C. — A bill supporters believe will bring more transparency into the Consumer Financial Protection Bureau’s guidance-making process was passed by the House Financial Services Committee on Tuesday.  

The bill, H.R. 4811, adds safeguards such as requiring prior public notice and greater transparency of future CFPB guidance. In addition, the bill would rescind a bulletin the bureau issued in March 2013. It stated that auto finance sources would be held responsible for discriminatory pricing resulting from policies that permit dealers to mark up interest rates as compensation for services rendered. The CFPB would be allowed to reissue the guidance, but with transparency and public review.

The Guidance Transparency Act bill passed the committee on a bipartisan 35-to-24 vote, with Democrats Joyce Beatty (Ohio), Steven Horsford (Nev.) and David Scott (Ga.) supporting the bill. It now heads to the full House of Representatives for a vote.

The bill will now be voted on by the full House of Representatives.   

Associations such as the National Automobile Dealers Association (NADA) have been vocal in support of the bill. On June 10, the NADA and the Alliance of Automobile Manufacturers, the American International Automobile Dealers Association (AIADA), American Financial Services Association (AFSA), Recreation Vehicle Industry Association (RVIA), and the Recreation Vehicle Dealers Association (RVDA) sent a letter to the committee in support of the bill.

“The auto finance guidance pressures indirect auto finance companies (lenders who finance auto loans originated by dealers) to eliminate the ability of dealerships to discount the interest rates offered to customers who finance their auto purchase,” the letter read, in part. “The bureau embarked on this new policy, by its own subsequent admission to Congress, without first studying what impact these policy changes would have on the auto finance market, or the marginally creditworthy.”

Comments

  1. 1. howell clark [ June 12, 2014 @ 02:26PM ]

    its a shame when common sense is a reactionary process, but kudos to the committee for standing up and trying to right the wrong headedness of these illogical, anti business and profit social justice folks that can only survive with government jobs. if theses folks are so concerned about fairness why don't they get a bunch of their like minded friends who have to be rich because they are so smart, together and form their own lending company that simply abides by their ideas of fairness ,and no profit and get back to me in ten years .

  2. 2. Nor cal dealer [ June 14, 2014 @ 09:27AM ]

    Absolutely ridiculous. Amazing these a holes In congress can literally shut down part of a Subset of an industry with one bill. We should doc there pay when they make mistakes and or make decisions that affect a lot of people negativity.

    Oh wait.... Congress isn't liable for anything that they do. My bad. I wish these aholes had to use there money to finance some "marginally creditworthy customers". Oh wait why would they need to do that. They got. Fat pension coming from tax payers like us.

  3. 3. A.K. [ June 21, 2014 @ 10:50AM ]

    In all fairness, the rate markup comes from sales process which in turn creates these discriminatory irregularities that then force lenders to hold the bag. Consistent rate markup existed for long time in Ohio and dealers are not much less profitable with getting paid percentage of amount financed instead of traditional rate markup reserve. It absolutely is broken in sales process end when sales manager increases loan interest rate to make up for often below profit margin vehicle sale. in these practices credit worthiness is not evaluated but rather overall transaction profitability. Looking at evidence at the lender level gives absolutely no clue what really happens during sales process. Use your heads folks before you even begin writing bills to be voted by people that frankly have no clue how we even got there!

 

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