Members of Congress probe CFPB on its car loans investigation

Members of Congress probe CFPB on its car loans investigation

Several Democratic members of the House Committee on Financial Services wrote the Consumer Financial Protection Bureau for background information on an advisory they published to lenders they regulate amid allegations of racial discrimination by dealer credit arrangers in consumer auto loans.

The letter from Congress is in response to CFPB guidance last March that advises indirect lenders it regulates to impose controls on markup their dealer clients do as credit arrangers for consumers. Additionally, CFPB wants lenders to monitor the effects of dealer markup on fair lending compliance, even to the point of ending dealer discretion to mark up buy rates entirely.

The May 28, 2013 letter from Members of Congress asks the CFPB to provide any and all background information about alleged discrimination in auto lending. Members of Congress also are probing the Bureaus allegations, methodology and expectations for compliance. The letter seeks clarification from regulators by June 7. Among the signers is John Delaney, Marylands newest congressman from the sixth, western-most district. Five others are members of the Congressional Black Caucus.

The CFPB is fundamentally changing the multibillion-dollar automobile marketplace and yet the bureau is not clear on how their actions will impact auto lending, consumers or the economy, said Damon Lester, president of the National Association of Minority Automobile Dealers, in a statement to Bloomberg, which first reported the story. NAMADs Lester also wrote President Obama recently to deny the allegations by CFPB of racial discrimination in auto dealer loan arranging and to complain about overreach by the newly established agency.

Download Bulletin PDF