Comfort confronts high anxiety as Consumer Protection Bureau takes root

LAS VEGAS -- An auto lenders trade group says it's somewhat reassured by what staffers from the new Consumer Financial Protection Bureau are telling it. But they're still anxious about how the new regulatory body will carry out its mandate.

Last week, members of the American Financial Services Association met privately with bureau representatives during the AFSA Vehicle Finance Conference here. Association members who attended those meetings said the bureau assured them that it will base decisions about regulations on data, taking industry input into account, and will not "shoot from the hip" based on anecdotal evidence.

Auto dealers -- excepting buy-here, pay-here stores -- are exempt from direct supervision by the bureau. But any new requirements for auto lenders are bound to affect dealers, too.

More transparent

For example, based on questions raised in other forums and the bureau's dealings with other types of lenders, the bureau is interested in creating new and more transparent loan documents. In auto lending, that could include disclosures about dealers' taking a slice of the profits on interest rates.

For now, the American Financial Services Association, which represents the captives and large banks, seems more confident that the bureau in turn will be more transparent to the industry.

"There are some good people at the CFPB -- honest, dedicated, hardworking people with good experience and background. We have been very encouraged in our dealings with them," said AFSA CEO Chris Stinebert. "They are not shooting from the hip. They state repeatedly they want to base decisions going on facts -- not on anecdotes, but on data, on empirical research. If that is true, then we have very limited concerns."

That's an about-face from the same conference a year ago. Last year, Stinebert complained about the uncertainty created in the industry by the Dodd-Frank financial reform legislation that set up the Consumer Financial Protection Bureau. "This is the first time I've ever been involved in legislation where no one knows what's going to happen," Stinebert said then.

In an e-mail to Automotive News last week, Consumer Financial Protection Bureau Assistant Director Richard Hackett confirmed the outlines of the bureau's reassurances to auto lenders, saying that keeping a "continuous dialogue" with the industry was important so that "our fact basis for planning and policies can be well-informed.

"Our decisions on use of regulatory tools, whether enforcement, supervision or otherwise, will be informed by data from stakeholders, including industry," he said.

Field staff concerns

But on a negative note this year, AFSA heard indirectly that bureau field staff showed up to perform bank examinations in other lending areas accompanied by lawyers in addition to the usual subject matter experts, which was unusual and off-putting, according to a panel discussion at the AFSA conference.

In January, the bureau also held what it called a "field hearing" into payday lending in Birmingham, Ala., on extremely short notice. Besides a hearing, the bureau used the event as a publicity platform to publish the bureau's guide for CFPB examiners who will look into payday lending.

"Why have a hearing? To make it look like they had public input?" said Michael Benoit, counsel for the AFSA Law Vehicle Finance Subcommittee and a partner with the law firm Hudson Cook.

Bill Himpler, AFSA executive vice president, said in effect auto lenders will have to wait and see. He said, "Despite what we hear from the [CFPB] staff, what we hear from the field I don't think really lowers our anxiety level."