House passes CFPB reform bill regarding indirect auto financing

House passes CFPB reform bill

Thursday, Nov. 19, 2015, 11:22 AM UPDATED 11:36 AM

To the delight of many in the automotive industry, the House of Representatives voted on and passed a bill aimed at altering the Consumer Financial Protection Board’s handling of indirect auto financing.

With a vote of 332 to 96, the House passed what the American International Automobile Dealers Association labeled a “common sense piece of legislation,” otherwise known as the Reforming CFPB Indirect Auto Financing Guidance Act.

If it passes through the Senate and is signed by the president in its current state, the legislation will amend the Consumer Financial Protection Act of 2010 by directing the CFPB, when proposing and issuing guidance primarily related to indirect auto financing, to:

provide for a public notice and comment period before issuing the guidance in final form;
make publicly available all information relied on by the CFPB;
redact any information exempt from disclosure under the Freedom of Information Act;
consult with the Board of Governors of the Federal Reserve System, the Federal Trade Commission, and the Department of Justice; and
study the costs and impacts of the guidance to consumers and women-owned, minority-owned, and small businesses.
The act would also nullify the CFPB Bulletin 2013-02, otherwise known as the Indirect Auto Lending and Compliance with the Equal Credit Opportunity Act, which was published in 2013.

"The CFPB is clearly trying to eliminate a consumer's ability to receive a discount on credit in the showroom,” said Peter Welch, the president of the National Automobile Dealers Association. “It is reasonable for Congress to ask for minimal due process to protect consumers.”

Cody Lusk, president of AIADA, issued the following statement on Thursday following the act’s passage through the House:

"International brand automobile dealers vehemently oppose discrimination in any form and fully support the efforts of the CFPB to eliminate it from the marketplace,” Lusk said.

"However, the CFPB has failed time and again to fully disclose its methodology for measuring the presence of disparate impact or provide transparency in issuing guidance to auto lenders. H.R. 1737 is a common sense solution to a problem the CFPB has itself created by working to end dealer discounts on financing without considering the negative impact on consumers.

"The House today chose to support small businesses by pushing back against CFPB policies that reduced competition among lenders and, as a result, raised rates on consumers."