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Auto finance critic Warren stands firm on CFPB dealership oversight

Jim Henry is a special correspondent for Automotive News.

Sen. Elizabeth Warren is once again calling for direct regulation of auto dealerships by the Consumer Financial Protection Bureau.

In a stinging speech last week, she also advocated for what amounts to a ban on dealer markup on auto loans and equated auto loans with “the pre-crisis housing market,” which helped bring about the 2008-09 recession.

“It’s no coincidence” that auto loans are “the most troubled consumer financial product out there,” said Warren, D-Mass. She said auto finance was “thick with loose underwriting standards, predatory and discriminatory lending practices and increasing repossessions.”

According to the senator, all those problems stem from Congress exempting auto dealerships from the CFPB’s jurisdiction.

“Congress should give the CFPB the authority it needs to supervise car loans,” she told audience members at the 24th Annual Hyman P. Minsky Conference in Washington on April 15.

It’s hard to say which of these points angers industry groups such as the National Automobile Dealers Association and American Financial Services Association the most, not to mention the CFPB’s mostly Republican critics in Congress.

NADA and AFSA maintain that auto dealerships were exempted fairly and squarely from CFPB regulation because dealerships as a rule don’t fund consumer loans. (Buy-here, pay-here stores are an exception; they fund loans and the CFPB has jurisdiction over them.) Neither dealers nor lenders like the way in which the CFPB uses lenders to police dealerships indirectly.

The industry notes that auto delinquencies and repossessions are at near historic lows and that access to credit is high, even for car buyers with subprime credit. And even the CFPB agrees that dealerships should be compensated for acting as middlemen in arranging customer loans. It just doesn’t want the payment to come by way of a discretionary interest-rate markup.

None of Warren’s criticisms is particularly surprising; she helped found the CFPB before she was elected senator.

Still, the speech is bound to disappoint anybody who thought Warren’s position might have eased a bit in the past few years.

You can reach Jim Henry at

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