On April 13, 2015, a bipartisan group of 34 members of the United States House of Representatives introduced a bill that would repeal a Consumer Financial Protection Bureau (CFPB) bulletin from 2013 challenging a common practice in the indirect auto finance industry where automobile dealers would set interest rates on consumer financings.
The bill, entitled Reforming CFPB Indirect Auto Financing Guidance Act, would nullify the CFPB’s indirect auto finance guidance and require the CFPB to provide for a notice and comment period before issuing any new guidance on indirect auto finance.
In a press release, the National Automobile Dealers Association applauded the bipartisan measure. “Consumers have the right to obtain auto financing at discounted rates, and those rights should be protected, not threatened,” said National Automobile Dealers Association President Peter Welch. “There is bipartisan support in Congress to require the CFPB to consider how harmful its guidance could be to consumers, and we applaud Reps. Guinta and Perlmutter for their leadership on this issue.”
The bill also would require the CFPB to (1) provide for a public notice and comment period before issuing the guidance in final form; (2) make available to the public, including on the website of the Bureau, all studies, data, methodologies, analyses, and other information relied on by the Bureau in preparing such guidance; (3) consult with the Federal Reserve System, the Federal Trade Commission, and the Department of Justice. These requirements would significantly hinder the CFPB’s ability to promulgate guidelines related to indirect auto financing.
The bill was referred to the House Committee on Financial Services, where action the Committee will take it under consideration.
Follow the Consumer Financial Services Law Monitor for further updates on this and other events.