Democratic senators quiz CFPB on its auto lending policies
WASHINGTON — Senate Democrats asked the Consumer Financial Protection Bureau for details on how the agency is monitoring the auto lending market, as financial markets have become “increasingly unstable” in the midst of the coronavirus outbreak.
The letter from Senate Banking Committee members Sherrod Brown, D-Ohio, and Elizabeth Warren, D-Mass., noted that auto loan debt is the second largest category of non-housing debt behind student loans. They raised concerns that CFPB Director Kathy Kraninger has not issued any public enforcement actions related to auto lending during her tenure.
“Aside from noting the existence of certain abusive auto lending practices outlined in the Bureau’s Supervisory Highlights, the CFPB has not issued a comprehensive report on this issue since 2017, and has not taken a single enforcement action against any auto lenders since 2018,” the senators wrote March 12. “While the agency does not have the authority to examine directly the practices of auto dealers, it does have the authority — and the responsibility — to examine the auto lending companies and financial institutions that provide loans.”
Specifically, Brown and Warren asked Kraninger whether auto dealers’ arrangements with lenders pose risks to consumers and how the CFPB deals with problematic arrangements. They asked how the CFPB determines whether underwriting practices present risks to consumers and if the agency maintains a database on loan durations and default rates for specific lenders.
After the CFPB recently defined its framework for determing if certain activity is "abusive," Brown and Warren asked Kraninger how the agency will evaluate whether an auto lender is engaged in an abusive practice. The senators also asked whether the CFPB is evaluating auto lenders' compliance with fair lending laws.
And the senators are asking Kraninger how the CFPB evaluates and prioritizes risks to consumers in auto lending and how many consumer complaints the agency has received related to auto lending practices.
Brown and Warren asked Kraninger to respond to their questions by March 26.