Auto loan chief at CFPB to leave; more scrutiny of dealers likely
The Consumer Finance Protection Bureaus assistant director overseeing auto finance, Richard Hackett, plans to leave the agency by the end of the month. The move, first reported by Politico and confirmed in the CFPB Monitor, said that Hacketts responsibilities for auto loans will be temporarily assigned to Rohit Chopra. The Bureaus Corey Stone will be permanently in charge of smaller dollar loan markets.
Speaking earlier this month at the National Automotive Finance Associations Non-Prime Auto Finance Conference, Hackett said dealer discretionary pricing of auto loans is not per se illegal, but it creates a measurable risk of discrimination, according to the F&I Showroom. Other speakers at the Conference recommended that dealers do rigorous training and keep careful documentation. Consumer lenders told Automotive News that dealers should expect much greater scrutiny of all consumer loans.
CFPBs concern is disparate impact, where discretionary pricing could unintentionally result in higher rates on auto loans for minorities. The agencys March guidance to banks it regulates on the subject expressed a preference for dealer credit arrangers going to flat fees instead of discretionary pricing. Taking exception, NADA has said that flat fees will decrease competition among dealers, thereby causing loan prices to consumers to go up. As credit arrangers, dealers are not subject to the regulatory reach of CFPB; but bank lenders doing business with dealers are, meaning that the new super agency can, indeed, impact the retail automobile business.Download Bulletin PDF