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DOJ, N.Y. Regulator Subpoena Capital One

March 05, 2015

MCCLEAN, Va. ─ Add Capital One to the growing list of finance sources that have received subpoenas from state and federal regulators regarding subprime auto finance originations and securitizations.

According to a Feb. 24 regulatory filing with the Securities and Exchange Commission, the finance source received subpoenas from the New York District Attorney’s Office and the U.S. Department of Justice (DOJ), requesting information related to its subprime auto finance business.

“Capital One is cooperating with both investigations,” the filing read.

In January, Consumer Portfolio Services revealed in a regulatory filing that it was also subpoenaed by the DOJ regarding its subprime auto finance practices and related securitizations. Santander Consumer USA (SCUSA), Ally Financial, GM Financial and Credit Acceptance have received similar subpoenas.

Regulators are also targeting debt-collection and repossession practices.

Last year, CPS agreed to pay more than $5.5 million to settle the Federal Trade Commission’s charges that it used illegal tactics to service and collect consumer loans. And last month, Santander USA Inc. agreed to pay at least $9.35 million to resolve a lawsuit filed by the DOJ. It claimed that the finance source’s repossession activities over a five-year period starting in January 2008 violated the Servicemembers Civil Relief Act.

A spokeswoman for Santander said the settlement, which covered 1,112 repossessions, is unrelated to the subpoena the DOJ issued to the finance source last year. The spokesperson noted that Santander neither admitted nor denied any wrongdoing in agreeing to settle the DOJ’s charges. She added that the finance source had already set aside funds to cover the cost of the settlement.

“Since 2012, SCUSA has used systemic controls to prevent improper repossessions of vehicles, including those who were contracted with SCRA-eligible customers,” read a statement Santander issued to F&I and Showroom magazine. “The majority of accounts found objectionable by the DOJ involved repossessions prior to 2012, and approximately one-third were accounts form other financial institutions that we converted to SCUSA accounts at a later date.”

In its regulatory filing, Capital One said that the regulatory climate has been heating up over the last several years, noting that state and federal regulators have focused on compliance in a number of areas, including data security, money laundering, fair lending and consumer-protection issues. And the finance source made clear it doesn’t see the scrutiny ending anytime soon.

“We are subject to heightened regulatory oversight by the federal banking regulators to ensure we build systems and process that are commensurate with the nature of our business and that meet the heightened risk management and enhanced prudential standards issued by our regulators,” the filing read, in part. “We expect this heightened oversight will continue for the foreseeable future until we meet the expectations of our regulators and can demonstrate that our systems and process are sustainable.”


  1. 1. Sheldon Wolff [ March 05, 2015 @ 12:41PM ]

    The big banks and lending institutions should be called in on the carpet. Their lending practices especially in the sub prime market is predatory. In today's economy even those who were good citizens regrading thier debt and responsible payment history have often fallen behind. Costs continue to climb and the subprime market which does provide a service and an opportunity have exorbitant interest rates. This is wrong. I understand the greater the risk the greater the reward but these high rates make it difficult if not impossible to save or get out of a poor situation. Even credit card interest is far beyond what it should be for many people. Banks paying .05% on savings yet charging around 24% is an affront to every american citizen. Those in the subprime market know how they slam the buyers into a contract and immediatlly the buyer is upside down for 2-3-4-5 years.... The banks also have destroyed the real estate market... It's time to re assess credit terms and offers.

  2. 2. david gluckler [ March 05, 2015 @ 12:57PM ]

    When my subprime customers fall behind I remind them the bank was not their friend loaning them money. The bank took a risk for a huge profit potential. The subprime borrower who defaults should have no guilt feelings..It is just business as usual for the bank.

  3. 3. Matt Payne The Credit Cow [ March 10, 2015 @ 09:39AM ]

    We as f&I people must do are do diligence to make sure we are doing are best to set are Clients up to succeed. What I mean by that is DO NOT "FLUFF" the credit app. If some one has $1200 dollars a month income do not put them out at a $600 dollar car payment. Do a good customer assessment to get them the best information you can get for them to make an educated decision. Also im not saying we tell people what they can afford and what they can't afford.


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