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CFPB Again Rejects NADA's FOIA Request

November 10, 2015

MCLEAN, Va. — The Consumer Financial Protection Bureau (CFPB) has again denied the National Automobile Dealers Association’s request for internal documents that allegedly show the agency acknowledging its intentions to regulate auto finance through enforcement action, and eschewed evidence that its methods for estimating disparate impact were deeply flawed.

The association Freedom of Information Act request was filed on Oct. 8, less than three months after the NADA filed its first FOIA request for documents leaked to American Banker. Those documents purportedly state the CFPB’s goal in the auto lending arena was to significantly limit dealer discretion, despite the Dodd-Frank Act prohibiting the bureau from regulating auto dealers.

“For the second time in four months, the [CFPB] has quashed efforts to make public a number of leaked documents that undermine many of the CFPB’s long-running claims that it is not attempting to regulate auto dealers in circumvention of the Dodd-Frank Act,” the NADA stated in a press release. “

On Sept. 17 and Sept. 24, American Banker published articles that made numerous references to internal CFPB documents. Those documents supposedly show that the CFPB based its understanding of vehicle financing on a now-discredited study conducted by the Center for Responsible Lending. The bureau also allegedly acknowledged in the documents that the proxy methodology it uses to determine the presence of discrimination in auto lending is flawed, yet it continues to use the results to reach large settlements with finance companies like Honda Finance Corporation and Fifth Third Bank.

"These documents demonstrate a lack of transparency and accountability that should be deeply troubling to anyone concerned about how significantly a regulator can influence a market that affects millions of consumers," said NADA President Peter Welch in a statement on the NADA’s website. "Consumers benefit tremendously from the discounts they get from dealers, and they have every right to demand that their voices be included in — not willfully excluded from — the debate about how to regulate the auto finance market."

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