House Democrats Request Details on CFPB Auto Lending Probe
Consumer advocates believe the bounties banks pay to car dealers for steering customers to high-interest loans are abusive. But with a ban likely to spark a political backlash, the Consumer Financial Protection Bureau is instead seeking to prove the markups are discriminatory.May 15
Auto dealership advocates are warning that costs will rise for borrowers if the Consumer Financial Protection Bureau presses banks to curtail auto loan markups determined by dealers.March 22
WASHINGTON Members of the House Financial Services Committee are pressing the Consumer Financial Protection Bureau for details about its investigation into discriminatory auto lending.
Thirteen Democrats wrote to CFPB Director Richard Cordray earlier this week asking for more information about reports that the agency is pursing enforcement actions against auto lenders that systematically offer higher dealer markups to minorities. The CFPB issued guidance in March that warned lenders about evidence that African Americans and Hispanics paid higher rates, but did not establish a rule outright banning dealer markups.
Banking panel members are now asking for more details about the CFPB's research and possible enforcement actions, including information about discriminatory practices being used in the auto lending market, the agency's methodology for determining whether there have been fair lending violations and its compliance expectations related to the March guidance.
"Consumers must be able to shop for credit without fear of discriminatory practices, and the consistent enforcement of anti-discrimination statutes is an essential part of assuring that consumers have access to affordable credit," the lawmakers wrote in the May 28 letter. They requested an answer to their inquiry by June 7.