National Automobile Dealers Association

Support Increased Transparency and Accountability for the CFPB

Cosponsor H.R. 4811 “The Bureau Guidance Transparency Act” 

See the vote tally on H.R. 4811 here.

The Consumer Financial Protection Bureau (CFPB) issued guidance that threatens to eliminate dealers’ flexibility to discount the interest rate offered to consumers to finance vehicle purchases.  The CFPB is attempting to fundamentally change the $783 billion auto loan market without prior public comment or hearing, answering specific bipartisan questions by Congress to justify this policy change, or analyzing the impact of its guidance on consumers.  With the CFPB’s actions likely to raise the cost of credit for car buyers, Members of Congress should cosponsor H.R. 4811 to make the Bureau more transparent and accountable when issuing future guidance.

The ability of the dealer to “meet or beat” their competitors’ auto finance rates produces vigorous marketplace competition that frequently provides customers a lower interest rate than the rates offered by banks or credit unions.  A majority of car buyers choose to finance their purchases through optional, indirect auto financing at dealerships.

In March 2013, the CFPB issued controversial guidance that attempts to force auto finance sources into changing the way they compensate dealers to a “flat fee” that dealers cannot discount for their customers.  The CPFB is basing this industry change on a theory of disparate impact, or unintentional discrimination.  Despite numerous bipartisan calls from Congress, the CFPB has not been transparent and has refused to provide its statistical analysis to substantiate its claim that dealer assisted financing results in disparate impact.
NADA supports H.R. 4811, a bill that would require the CFPB to be more transparent and accountable when it issues guidance.  The bill adds safeguards such as requiring prior public notice and greater transparency of future Bureau guidance.  In addition, the bill would rescind the auto finance guidance, but would allow the CFPB to reissue it with transparency and public review.

Key Points

• NADA strongly opposes any form of discrimination in auto lending and has distributed a model Fair Credit Compliance Policy to reinforce dealers' commitment to legal compliance and fair treatment of all customers, while maintaining a dealer’s ability to discount interest rates, which benefits consumers.

• The CFPB, in its attempt to significantly alter the auto finance market, issued guidance without prior public comment, hearing, and transparency.

• TThe Bureau has used the guidance process as a substitute for rulemaking.   The CFPB’s attempt to force fundamental changes to the $783 billion auto loan market, which will have a major impact on consumers, should not be done without transparency.
Coalition Letter
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• H.R. 4811 merely requires minimal safeguards such as a public comment period and public access for documents supporting a guidance; it does not change issuing guidance into a rulemaking process. For example, the bill does not require the time consuming and more rigorous provisions of a rulemaking, such as publishing in the Federal Register, a cost benefit analysis, the ability of affected parties to contest a rulemaking, etc. 


Rep. Stutzman (R-IN) introduced H.R. 4811 on June 9, and it was reported out of House Financial Services Committee on June 11 by a bipartisan vote of 35-24.

June 12, 2014