Can dealers stop worrying about enforcement on dealer reserve?

When Richard Cordray was director of the Consumer Financial Protection Bureau during the Obama administration, banks that worked with dealers were worried about too much discretion in setting dealer reserve, leading to the potential appearance of discrimination. Enforcement actions by the CFPB led some lenders to require dealers to use a flat fee system instead.


But two banks, BB&T and BMO Harris Bank, recently announced that they would drop their flat fee program and let dealers go back to setting their own rates, albeit within limits, reported Automotive News.


The CFPB isn’t the same since Cordray resigned and President Trump appointed Office of Management and funding for the agency in his 2018 budget request. The Trump budget proposal slashes the current funding by $150 million, about one-fourth of the agency’s original budget.


As for the independent setup, a federal appeals court ruled recently that the president may not terminate the CFPB director at will, overturning an earlier court ruling. That won’t be an issue in this administration, as anyone Trump nominates as agency director – and the Republican Senate approves – is likely to follow in Mulvaney’s footsteps. Republican senators have long expressed unhappiness over what they see as the CFPB’s regulatory overreach.

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