WASHINGTON — The Consumer Financial Protection Bureau has denied a trade group's request for a document detailing internal agency discussions about pricing limits for Honda's partnering dealers.

The National Automobile Dealers Association had filed a Freedom of Information Act request for an internal memorandum dealing with how the CFPB negotiated a proposed settlement with American Honda Finance Corp. The memo — obtained and reported on by American Banker last month — discussed the company's agreeing to lower a cap under which dealers can boost interest rates. A lower cap ultimately was part of the July 14 settlement, which addressed allegations that Honda's partnering dealerships discriminated against minorities.

But NADA on Monday announced the agency had declined to release the document publicly, prompting concerns by the dealer group that the agency is not being fully transparent about its process.

"The CFPB's response only suggests that they have even more to hide than first thought," NADA President Peter Welch said in a press release.

According to the memo obtained by American Banker, CFPB officials said that American Honda's agreeing to lower the price discretion for dealers would lower the risk of disparities in loan rates between minority borrowers and white borrowers.

"The significant limitation of dealer discretion, which in turn reduces fair lending risk, is one of the goals we have been seeking with respect to the indirect auto matters, and this settlement proposal attains that goal," Jeffrey S. Morrow, Jane M.E. Peterson and Rebecca J.K. Gelfond, who work in the CFPB's office of fair lending and equal opportunity, wrote in the June 16 memo to CFPB Director Richard Cordray laying out the terms of the proposed deal.

NADA said the statement reveals the CFPB is "seeking to exercise jurisdiction over auto dealers" by controlling the price discretion of indirect auto lenders even though the agency has no direct supervision authority over dealerships. Lawmakers have also raised question about how the CFPB has targeted indirect auto lenders. A House bill due to be considered by the Financial Services Committee on Tuesday would invalidate a March 2013 bulletin the bureau released with compliance guidelines for indirect car lenders.

"The CFPB appears to be way outside the swim lane Congress authorized it to swim in and an increasing number of Democrats and Republicans are justifiably concerned about the agency's secrecy and its actions," Welch said.

The $24 million proposed settlement, which the CFPB announced along with the Department of Justice, included the same lower price caps mentioned in the memo. But in response to NADA's July 13 FOIA request, the bureau said the document was "privileged," the group said.

"Ultimately, both the [House's proposal] and NADA's FOIA request are about ensuring government transparency and accountability on behalf of consumers, who simply can't afford to be denied millions of dollars in potential savings without having a say in the matter," Welch said.

A CFPB spokesman said the agency has no further comment about its response to NADA's request.

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