Commentary: Urge Congress to Rescind Flawed CFPB ‘Guidance’ on Auto Finance

By Forrest McConnell / NADA chairman

Sept. 25, 2014 - A new bipartisan bill, which would nullify the Consumer Financial Protection Bureau's flawed 'guidance' on indirect auto lending, has gained a lot of support in Congress from both sides of aisle over a short period of time.

Since its introduction on September 8, nearly 100 Democrats and Republicans in the U.S. House of Representatives have signed on as supporters of H.R. 5403, a bill sponsored by Reps. Marlin Stutzman (R-Ind.) and Ed Perlmutter (D-Colo.).

H.R. 5403, which is appropriately titled, Reforming CFPB Indirect Auto Financing Guidance Act , requires the CFPB to provide a public comment period before reissuing any guidance on auto finance. The bill also requires transparency and accountability from the agency by making public any studies, data and analyses used to determine future guidance on auto finance.

Dealer-assisted financing provides great value and competitive advantages, which saves car buyers billions of dollars each year. And the proof is in the numbers. Compared to other lending sources, a large majority of car buyers choose to finance their vehicles through new-car dealerships, which is always optional.

Despite this fact, the CFPB is taking actions that will ultimately harm car buyers by reducing competition in the auto-lending marketplace.

This controversy with the CFPB has been ongoing since March 2013 when the agency issued its 'guidance,' which took the wrong direction by attempting to eliminate the flexibility of new-car dealers to discount financing rates offered to their customers. Since then, the industry-from dealers to lenders-and Members of Congress have worked to bring greater transparency and accountability to the CFPB.

Make no mistake. This issue is complex. But what NADA wants from the CFPB is quite simple and our message to the CFPB is this: Make sure you fully understand the industry you're attempting to regulate before issuing guidance by allowing for feedback and public participation. Be aware that your actions can harm consumers rather than protect them. And car buyers should not be forced by a government agency to lose their ability to negotiate discounted auto loan rates in dealer showrooms.

Dealers should contact their Members of Congress and urge them to support H.R. 5403, the Stutzman-Perlmutter bill.

To locate your House member, click here. For the issue brief on H.R. 5403, list of cosponsors, bill text and a section by section analysis, visit

McConnell is a Honda/Acura dealer in Montgomery, Ala.