The auto finance industry, auto dealers, and their mostly Republican allies in Congress continue to make it clear they don’t like the Consumer Financial Protection Bureau or how it was set up in 2010.
They also don’t like the CFPB and the U.S. Department of Justice using the disparate impact theory to try and prove discrimination in auto lending, the legal theory behind a $98 million consent order with Ally Financial Inc. late last year.
And the lenders, dealers, and their allies would like all those things to change. However, that doesn’t mean those changes are coming any time soon.
They keep trying. With the urging of auto lenders, the U.S. House of Representatives has passed a bill that would withhold funds for litigation in which the Justice Department seeks to use the disparate impact theory to prove illegal discrimination.
In addition, the House Financial Services Committee voted yesterday to “rescind” industry guidance the CFPB published in March 2013 warning lenders that the CFPB would hold lenders responsible if dealers created a disparate impact -- i.e., higher rates -- for legally protected classes, such as minorities or women.
Auto dealers and auto-finance institutions deserve credit for getting the attention of a majority of Congressmen on what is, to be honest, a fairly obscure bit of legal theory. But if you’re hoping these challenges to the CFPB will become the law of the land, don’t hold your breath.
Even Bill Himpler, executive vice president for the American Financial Services Association, acknowledged in a phone interview that the going gets tough once legislation leaves the House.
The Democrat-controlled Senate is less likely to go along. The Senate, it must be remembered, has largely ignored what have become essentially symbolic, but meaningless, bills from the House attempting to repeal Obamacare.
Himpler said, “We are going to work on getting it adopted in the Senate.” But he admitted that the Senate is “a little rougher terrain.”