CFPB sets field hearing, may act on auto lending
CFPB is set to hold a field hearing on auto finance Sept. 18 in Indianapolis, Ind., where it could announce a new regulatory policy on auto lending.
NAFCU and others raised concerns in response to the bureau's current guidance for indirect auto lenders last spring. NAFCU noted that the guidance appeared to put credit unions between auto dealers and the bureau, which has no direct supervisory authority over auto dealers under the Dodd-Frank Act.
The guidance potentially sets the stage for making indirect lenders, including credit unions, liable for auto dealers' fair lending violations. In Bulletin 2013-02, CFPB focuses on potential for pricing disparities on the basis of race, national origin and other prohibited factors by dealers that facilitate funding for consumers' auto purchases through indirect lenders. If there are disparities within the indirect lender's portfolio, it says, lenders may be liable under the legal doctrines of both disparate treatment and disparate impact.
In May, 13 Democratic members of the House Financial Services Committee wrote CFPB asking for background on how it found fair lending violations, and in June, 35 Republican House members wrote CFPB with concerns about the guidance, calling the requirements for indirect auto lenders "onerous."
American Banker recently cited observers who believe a new auto lending policy could come from CFPB this month. "One option for the agency is to use authority under the Dodd-Frank Act to create a ‘larger participant' supervisory program for nonbank auto lenders, like it has for other financial entities outside the commercial banking industry."
The paper also noted the $2.8 million fine levied by the bureau against a Texas auto lender in August.
The field hearing this month will be open to the public and streamed live, and will feature remarks from CFPB Director Richard Cordray as well as testimony from consumer groups and industry representatives.
Get daily updates.
Subscribe to NAFCU today.