The WasteWatcher: The Staff Blog of Citizens Against Government Waste

Past Porker Cordray Crimps Car Dealers

The WasteWatcher is the staff blog of Citizens Against Government Waste (CAGW) and the Council for Citizens Against Government Waste (CCAGW). For questions, contact blog@cagw.org.


So, the Consumer Financial Protection Bureau (CFPB) is at it again!

According to the September 17th, 2014 edition of the Wall Street Journal, the agency announced its intention to regulate the automobile dealers and the finance companies that service them. In prepared remarks, CFPB Director Richard Cordray (named August 2014 “Porker of the Month” by CAGW for the egregious overspending to refurbish CFPB’s rented office space) has deigned to extend his agency’s reach into the realm of auto lending, to right perceived wrongs. The proposed rule can be found here.

The National Automobile Dealers Association (NADA), the National Asssocation of Minority Automobile Dealers (NAMAD), and the American International Automobile Dealers Association (AIADA), representing the interests of auto dealers before the federal government, issued the following statement:

“As stated on numerous occasions, NADA, NAMAD and AIADA strongly oppose discrimination in any form and fully support the efforts of the CFPB, the Department of Justice, the Federal Trade Commission and other federal agencies to eliminate it from the marketplace.

“However, the CFPB has again failed to fully disclose its methodology for measuring for the presence of disparate impact. There are legitimate, market-based reasons for disparities in interest rates – from monthly budget constraints, to the presence of more competitive offers, to inventory reduction considerations – all of which are nondiscriminatory and all of which can be documented in the transaction. A better solution would be for lenders to adopt a robust retail compliance program that documents the basis of the pricing decision to effectively reduce the risk of discrimination in the purchasing process. The Department of Justice has created such a risk mitigation model, and we encourage the Bureau not to overlook this common sense approach to addressing fair credit risks in the auto financing market.

“With respect to the proxy methodology report released by the CFPB, many of the questions that Congress and others have asked remain unanswered. We look forward to rigorous peer review to ensure that the tools the Bureau is using to address fair credit concerns may actually accomplish its goals.”

Cordray’s further meddling in this sector of the economy follows the CFPB’s March 2013 guidance on auto lending. In response to this overreach, H.R. 5403, the “Reforming CFPB Indirect Auto Financing Guidance Act,” a bipartisan bill that now boasts 56 Republican and 31 Democrat co-sponsors, was introduced by Rep. Marlin Stutzman (R-Ind.) on Sept. 8, 2014. The text of the bill can be seen here.

Today, the Council for Citizens Against Government Waste, CAGW’s lobbying arm, submitted a letter in support of the legislation. The text of the letter can be seen here.

On a related note, for the definition of a government shakedown, see also my July WasteWatcher, entitled “Consumer Financial Protection Racket – er, Bureau.”

 

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