Congress was right to exempt auto dealers from CFPB

FACT: When Dodd-Frank was created, Congress specifically exempted dealers from CFPB jurisdiction in the Wall Street reform bill.

Here's why:

  • Auto dealers are retailers, not banks. Their primary business is selling and servicing cars and trucks. Although dealers help consumers obtain financing – called dealer assisted financing – by finding and facilitating loans with great rates, they do not underwrite, fund, service or securitize these loans. This is done by banks and other financial companies that are subject to CFPB oversight and regulation.

  • Due to dealers' distinction as retailers, as well as the lack of accountability in the CFPB's structure, there was broad bipartisan support in Congress to reject an attempt to place dealers under the purview of the CFPB. This exemption was supported on a bipartisan basis in both the House and Senate, and included in the final legislation creating the CFPB.

  • Auto dealers, including their financing operations, have been and continue to be subject to extensive federal and state consumer protections.

  • The CFPB was created to address problems that originated on Wall Street, and Congress was right to exempt Main Street businesses, including auto dealers, that played no part in the financial crisis. In fact, it's these Main Street businesses that have fueled the economic recovery.

  • The argument for subjecting dealers to further and redundant regulations under the CFPB has always been based on false and misleading claims, and has never been supported by the facts.