Industry will lose respected opponent when Hackett exits CFPB

Groups representing auto lenders and dealers don't like much about the Consumer Financial Protection Bureau. But at least they knew there was somebody at the CFPB who had walked a mile in their shoes: Assistant Director Rick Hackett. Now Hackett has said he's leaving.

An attorney, Hackett has been the CFPB's point man on auto lending regulation. He joined the bureau in 2011 from Pierce Atwood in Portland, Maine, where he had founded a practice in banking and financial services.

"The bureau will have a hard time finding someone who will be as effective in gaining the industry's confidence as Rick has been," said Tom Hudson, a partner at the Hudson Cook law firm in Hanover, Md., whose clients include auto dealers and auto lenders.

That type of trust in Hackett has been important because groups such as the National Automobile Dealers Association and the Washington-based American Financial Services Association, which represents lenders, have a lot of issues with the CFPB.

Lender and dealer groups don't like:

• That the CFPB exists at all, given that other regulators, such as the Federal Trade Commission, already had jurisdiction over auto lending.
• That the CFPB is structured with a single director instead of a board of directors.
• That President Obama appointed CFPB Director Richard Cordray during a Congressional recess.

• That the CFPB is trying to stamp out dealer reserve, the dealerships' portion of the interest rate consumers pay on auto loans, even though Congress specifically omitted franchised, new-car dealers from the CFPB's jurisdiction when it was created in 2010 as part of the Dodd-Frank financial reform.

And they really, really don't like that Cordray in March as much as accused auto lenders and dealers of discriminating against legally protected classes such as minorities. Cordray cited the disparate-impact theory, which holds that if protected classes pay higher rates, that's discrimination, even if it's unintentional.

To top that off, the CFPB has refused to share: (1) exactly how it does the math on whether protected classes are suffering from a disparate impact, (2) precisely how it figures out which consumers belong to protected groups, or (3) how much of an impact it's talking about.

Still, industry groups give Hackett high marks for being a straight shooter.

Hackett said he plans to step down from day-to-day work effective June 28 and that he expects to leave the CFPB in August. The bureau has not yet named a successor, either temporary or permanent.

Bill Himpler, executive vice president for the American Financial Services Association, said Hackett brought valuable experience to the CFPB since Hackett represented companies in the financial services industry in the past.

"He has been a real asset at the bureau, explaining why a given proposal would work or wouldn't work or needed to be tweaked," Himpler said. "He comes with a pretty extensive background of having represented clients in the financial services industry."

A spokesman for NADA echoed that sentiment in an e-mail: "We appreciated the opportunity to engage with Rick Hackett during his tenure at the CFPB, and we valued the deep industry experience he brought to the job. We look forward to continuing to work with the other members of the agency's staff."

Hudson said he's known Hackett for 30 years. "If he says the moon's made of cheese," Hudson said, "you can order some crackers."