In December, Patrice Ficklin, fair lending director at the Consumer Financial Protection Bureau, outlined the CFPB’s 2017 fair lending priorities: redlining, mortgage and student loan servicing and small-business lending. Auto lending wasn’t among them.
That didn’t stop members of Congress from roasting CFPB Director Richard Cordray on the bureau’s effect on the auto industry during his semiannual report to the House Financial Services Committee last week.
In his opening remarks, Rep. Jeb Hensarling, R-Texas, chairman of the committee, blamed the CFPB’s auto lending guidance for making customers pay nearly $600 more for their auto loans.
With the 2013 auto lending guidance, the CFPB tried to “impose control over dealer indirect auto lending compensation,” Hensarling said. “In doing so, the CFPB sought to illegally regulate companies over which it has no statutory authority and which, in fact, are expressly exempt under the Dodd-Frank law.”
When Rep. Claudia Tenney, R-N.Y., asked Cordray why the CFPB pulled away from auto lending actions, Cordray said the auto lending guidance regurgitated the law.
“That guidance merely, as we understood it, restated existing law and didn’t add anything to it,” Cordray said. “What we did say is, we have a fair lending program. We have limited resources. We set our priorities every year.”
The CFPB has never taken a direct action against dealers, but Cordray acknowledged its actions could affect dealers, comparing it to when the Federal Reserve increases interest rates. The Federal Reserve doesn’t regulate dealers, but the rate hike still affects them, he said.
The CFPB has the responsibility to regulate lenders, Cordray said, and lenders and dealers “get in each other’s way. That’s an unfortunate way the statute was drawn.”
“I don’t think it’s very logical, honestly, to give someone responsibility for auto lenders, but not auto dealers, and vice versa,” he added.
Although auto lending seems to have lowered on the CFPB’s priority list, the impression the CFPB made on the auto industry will last as the issue lingers in congressional members’ minds.