Senate debates CFPB changes

The National Automobile Dealers Association (NADA) has applauded efforts by Republican senator Jerry Moran to introduce legislation in the US Senate which it says will protect consumers by bringing transparency and accountability to the Consumer Financial Protection Bureau’s (CFPB) regulation of the auto finance market.

Earlier this month Moran, a member of the Senate’s banking, housing and urban affairs committee, introduced S. 2663, the “Reforming CFPB Indirect Auto Financing Guidance Act,” which would require the CFPB to withdraw the agency’s guidance that attempts to eliminate a dealer’s ability to discount auto financing for consumers.

NADA has been at the forefront of an industry campaign to have this guidance revoked, on the grounds it is flawed. The new legislation also requires safeguards, such as public participation and transparency. Nothing in the bill would restrict the CFPB’s ability to enforce fair credit laws in auto financing, the association claims.

The bill is identical to legislation introduced in November and passed by the House of Representatives.

“Every consumer deserves access to competitive financing and great rates when they buy a new car or truck, but the CFPB’s misguided policy of eliminating consumer discounts on auto loans is making financing more expensive and harming many of the very people the agency is trying to help,” said NADA president Peter Welch. “Fortunately for consumers, there is strong bipartisan support in Congress for protecting consumers’ rights and consumer savings by repealing the CFPB’s flawed guidance, and we commend Senator Moran for his leadership on this issue.”

Consumers have access to multiple lenders when financing through a local dealership, and dealers can discount loans to meet or beat competitive offers, but the CFPB policy aims to end loan discounting. While the agency argues that giving dealers discretionary rights to vary loan rates can result in discrimination against some groups, NADA says this is misguided. In August, The Wall Street Journal estimated that the CFPB’s campaign to eliminate dealer discounts would cost some consumers up to $600 on a typical new-car loan.