The U.S. Senate voted to repeal the Consumer Financial Protection Bureau's auto lending guidance last week. Meanwhile, the CFPB's acting director pushed for more oversight for the bureau and explained his views in revising its enforcement strategy.
A resolution that would rescind the bureau's auto lending guidance, which aims to limit dealerships' retail margin on auto loans, passed by a narrow 51-47 vote Wednesday, April 18. Next, it will head to the House for a vote as early as this week.
Senate Joint Resolution 57 would overturn a 2013 CFPB auto lending bulletin. The bulletin suggested indirect auto lenders either limit dealer reserve, which is the retail margin that dealerships earn for arranging a loan, eliminate dealer discretion on the margin altogether or compensate dealers with a flat fee instead.
The CFPB has said that dealerships' discretion to vary that retail margin led to minorities being charged higher interest rates for auto loans than nonminority borrowers with similar credit, even if no discrimination was intended.