On July 29, the House Financial Services Committee reported House Bill 1737, the “Reforming CFPB Indirect Auto Financing Guidance Act,” to the House for full consideration. If passed, the bill would rescind the CFPB’s March 2013 fair credit guidance to indirect auto lenders (CFPB Bulletin 2013-02), and require the CFPB, when proposing and issuing future guidance related to indirect auto financing, to take basic procedural steps to ensure its guidance is both transparent and informed. These steps include providing for public notice and comment, making publicly available the methodologies and other information the CFPB relied upon in developing the guidance, coordinating with the federal agencies with fair credit oversight authority over auto dealers (the Board of Governors of the Federal Reserve System, the Federal Trade Commission, and the Department of Justice), and studying the cost and impact of the guidance on consumers and on small, women-owned, and minority-owned businesses.
This is the latest in a series of concerted efforts to quash the CFPB’s guidance aimed at the auto industry. In short, the CFPB has been attempting to eradicate discretion in dealer pricing of financing so as to fundamentally reform a basic business practice in the indirect lending industry. Last September, we reported on the ongoing controversy caused by the CFPB’s efforts related to the indirect auto lending industry, as discussed here, here, here, and here.
The Committee vote was 47-10, with all Republicans and a majority of the Democrats on the committee voting in favor of the bill. Introduced in April 2015, and sponsored by Frank Guinta, a Republican representative from New Hampshire, H.B. 1737 now moves for a vote of the full house. Further updates on this bill will be reported here in the Consumer Financial Services Law Monitor.