Bipartisan CFPB Transparency Bill Passes House Overwhelmingly
CONGRESS REJECTS CFPB'S ATTEMPT TO ELIMINATE DEALER DISCOUNTS IN THE SHOWROOM
McLEAN, Va. (Nov. 18, 2015)-Democrats and Republicans joined forces in the U.S. House of Representatives on Wednesday to overwhelmingly pass legislation to protect consumers by bringing transparency and accountability to the Consumer Financial Protection Bureau's (CFPB) regulation of the auto finance market.
H.R. 1737, the "Reforming CFPB Indirect Auto Financing Guidance Act," introduced by Reps. Frank Guinta (R-N.H.) and Ed Perlmutter (D-Colo.), passed on a 332-96 vote. 244 Republicans and 88 Democrats voted for the bill.
The Guinta-Perlmutter bill requires the Consumer Financial Protection Bureau (CFPB) to withdraw the flawed guidance that attempts to eliminate a dealer's ability to discount auto financing for consumers. The bill also requires the minimal safeguards the agency failed to follow, such as public participation and transparency. Nothing in the bill would restrict the CFPB's ability to enforce fair credit laws in auto financing.
"The CFPB is clearly trying to eliminate a consumer's ability to receive a discount on credit in the showroom. It is reasonable for Congress to ask for minimal due process to protect consumers," said NADA president Peter K. Welch.
Welch praised Congressman Guinta and Perlmutter for their leadership. "The CFPB's action will raise credit costs for consumers. We commend Congressmen Guinta and Perlmutter for working on a bipartisan basis to protect car buyers."
Welch also again urged the CFPB to embrace the fair credit compliance program proposed by NADA, the National Association of Minority Automobile Dealers (NAMAD), and the American International Automobile Dealers Association (AIADA), which allows a dealer to discount credit rates for consumers when there is a legitimate business reason for doing so that is unrelated to the consumer's background.
The NADA/NAMAD/AIADA Fair Credit Compliance Program is based on a platform developed in 2007 consent orders by the Civil Rights Division of the U.S. Department of Justice. Many dealerships have adopted this program, and well-respected compliance attorneys have reviewed and approve of this approach.
"The Department of Justice has already developed a way to address fair credit risk in auto financing while preserving competition," Welch said. "It's a viable, common-sense solution, and the government should preserve the benefits of a competitive auto finance market that benefits all consumers."