Broad Industry Coalition Backs Congressional Repeal of Flawed CFPB Guidance



WASHINGTON (June 11, 2015) - A broad coalition of auto industry organizations, led by the National Automobile Dealers Association (NADA), has expressed strong support for bipartisan legislation that would rescind a 2013 guidance from the Consumer Financial Protection Bureau (CFPB) designed to pressure lending institutions into eliminating the availability of auto financing discounts for car buyers.

This week, nine industry groups representing businesses that manufacture, sell, service, auction, and finance the purchase of cars, trucks, recreational vehicles and motorcycles urged Congress to support H.R. 1737, the Reforming CFPB Indirect Auto Financing Guidance Act. The legislation, which has 45 Republican and 37 Democratic cosponsors, would rescind the CFPB's flawed 2013 guidance on auto finance and require the CFPB to reissue it only after going through a transparent, collaborative and informed process.
"H.R. 1737 is needed to produce a more informed guidance compared to the 2013 guidance, which lacked public input, transparency, consultation with the CFPB's sister agencies and, by the CFPB's own admission, any study of the impact of the guidance on consumers," the groups wrote in a letter to members of the House Financial Services Committee, which is scheduled to discuss the bill on Thursday as part of a hearing on "legislative proposals to preserve consumer choice and financial independence."
"As a consequence of being issued without these essential safeguards, the CFPB's guidance could potentially: (1) eliminate a dealer's ability to discount credit in the showroom; (2) raise credits costs; and (3) push marginally creditworthy consumers out of the auto credit market entirely," the letter continued.
NADA was joined by, among other groups, the American Financial Services Association and the Alliance of Automobile Manufacturers in signing the letter.
In addition to calling for passage of H.R. 1737, the groups also pointed out that NADA has already operationalized the most-effective way of addressing fair credit risk in the marketplace - through the voluntary NADA Fair Credit Compliance Policy and Program for motor vehicle dealers.
"Apart from the fact that the guidance should not be used as a means to make sweeping policy and market changes, the CFPB auto guidance does not effectively manage fair credit risk in the showroom, which is its purported goal," the letter read. "The Department of Justice (DOJ), however, has created a better approach to address fair credit risk without decreasing competition and harming consumers. The DOJ model was used as a template for a comprehensive compliance program that the National Automobile Dealers Association, National Association of Minority Automobile Dealers, and American International Automobile Dealers Association issued last year to their respective members. This compliance program addresses fair credit risk where it matters - in the showroom - while preserving a dealer's ability to discount credit."  
NADA President Peter Welch said it was no surprise that such a wide swath of the industry signed the letter in support of H.R. 1737.
"There is increasing recognition that there is a way to address fair credit concerns that doesn't involve Washington stripping away the right every consumer has to negotiate and benefit from a better deal on an auto loan," Welch said.
H.R. 1737 was introduced by Reps. Frank Guinta (R-N.H.) and Ed Perlmutter (D-Colo.), and is identical to legislation (H.R. 5403) that garnered 149 bipartisan cosponsors in the 113th Congress.
Click here for the letter.
The letter was signed by: NADA; the Alliance of Automobile Manufacturers; the American Financial Services Association; the National Independent Automobile Dealers Association; AIADA; the Recreational Vehicle Dealers Association; the Recreational Vehicles Industry Association; the National Auto Auction Association; and the Motorcycle Industry Council.
NADA represents 16,000 new-car and -truck dealerships, with about 32,000 domestic and international franchises. For more information, visit

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