Five years ago this week, with the stroke of a presidential pen, and with all eyes focused on Wall Street instead of America's auto malls, a federal bureau was born.
Happy Birthday, CFPB.
You've never looked more battered.
The Consumer Financial Protection Bureau's anniversary, as unceremonious as it might be for some, is pause for reflection. Not all of it is good.
Remember, the Dodd-Frank Wall Street Reform and Consumer Protection Act was intended as the most significant financial reform since the Great Depression.
But, five years later, the CFPB (a subsection of Dodd-Frank) is still as much of a mystery as it was on Day 1.
The agency's original mission was to make the auto finance business more consumer-friendly. But understanding how it measures things, and the menu of options it considers, I'd argue it's done the opposite.
Let's step back and look at the facts.
Exhibit A: Credit scores.
According to dealers, the CFPB is still not factoring credit scores into its calculations.
You don't need a federal bureau to tell you that it's just more difficult to get buyers with rotten credit scores approved for loans. That means the loans cost more to execute -- and that leads to higher dealer markups.
It's called the business of selling cars.
Five years later, the CFPB has arbitrarily chosen to exclude certain variables, such as credit scores.