WASHINGTON, D.C. — Nine trade groups representing various motor vehicle-related industries rang in the Consumer Financial Protection Bureau’s five-year anniversary by urging U.S. Senators to support legislation that would rescind the regulator’s March 2013 guidance on dealer participation.
In a letter dated July 19, the groups asked lawmakers to help pass Senate Bill 2663, the “Reforming CFPB Indirect Auto Finance Guidance.” Identical to H.R. 1737, which was approved last November by a 332-96 House vote, the legislation would also add a few extra steps to the bureau’s guidance-writing activities. It was introduced in March by Sen. Jerry Moran (R-Kan.) and is currently sitting in the Committee on Banking, Housing, and Urban Affairs.
“Senate action on S. 2663 is necessary to ensure the CFPB follows a fact- and data-based approach,” the letter stated, in part. “The CFPB’s attempt to eliminate the consumer-friendly practice of a dealer discounting credit has been sought not by rule, but by guidance and nonpublic enforcement actions. The guidance was issued without any public comment, consultation with the CFPB’s sister agencies (including those that Congress authorized to regulate auto dealers), or transparency.”
The letter was by executives from the National Automobile Dealers Association (NADA), the American Financial Services Association (AFSA), the National Independent Automobile Dealers Association (NIADA), the American International Automobile Dealers Association, the Alliance of Automobile Manufacturers, the National RV Dealers Association, the Recreation Vehicle Industry Association (RVIA), the National Auction Association, and the Motorcycle industry Council.
The steps the legislation would add include providing notice and a public comment period; making public any studies, data, and analysis upon which the new guidance is based; consulting with regulators that have authority over dealers, including the Federal Reserve Board and Federal Trade Commission; and studying the costs and impact of such guidance to consumers and women-owned, minority-owned, veteran-owned, rural, small businesses.
“S. 2663 is purely a process bill,” the letter stated. “It does not intrude on the CFPB’s structure, jurisdiction, or authority, nor does it direct a result.”
The trade groups also noted that the bill would establish a framework for the industry to adopt the U.S. Department of Justice’s fair credit risk mitigation model, which the NADA used to develop its Fair Credit Compliance Policy & Program. The CFPB, however, has yet to recognize the model as a solution that addresses its fair lending concerns.
Today marks five years since the bureau opened its doors. Posted on its website is a video featuring CFPB Director Richard Cordray, U.S. Senator Elizabeth Warren, who many consider the bureau’s architect, and consumers the CFPB has helped. The site also contained a roundup of the CFPB’s work, noting that the regulator’s actions have resulted in “$11.7 billion in relief for more than 27 million harmed consumers.”
“I think we made a lot of change in how financial institutions treat consumers,” Cordray says in the video. “They know they have to comply with the law — that somebody is looking over their shoulder to make sure they do that, that somebody is standing on the side of people and making sure their treated fairly. That’s immensely important.”