F&I and Showroom, April 2014

Developments CONTINUED FROM PAGE 8 This isnt the fi rst time the CFPB has faced questions about transparency Industry experts and lawmakers alike have also questioned the bureaus transparency with regard to the method it is using to identify discrimination in auto fi nance portfolios As of press time the CFPB had yet to respond to Hensarlings request However in an 10 F I and Showroom April 2014 op ed piece published on March 9 in The Wall Street Journal former bureau offi cial Ronald Rubin revealed that CFPB Director Richard Cordray has already ordered a thorough inquiry into the matter It seems inconceivable that the CFPBs management could be discriminating against its workers But disparate impact statistics equal discrimination Or at least thats what the CFPB tells the businesses it regulates he wrote in part Are the CFPBs managers discriminating based on race despite the agencys best intentions Were the statistical disparities caused by cronyism elitism or some other problem he continued The more important question is whether the bureau will reconsider its commitment to the disparate impact doctrine after witnessing its fl aws fi rsthand T he National Automobile Dealers Association NADA sent a letter on Feb 26 to members of the House of Representatives in support of H R 3193 a bill introduced last September that would bring greater accountability to the Consumer Financial Protection Bureau CFPB The bill known as the Consumer Financial Protection Safety and Soundness Improvement Act of 2013 was approved the following day by a 232 to 182 vote It is now set to go before the U S Senate If the CFPB like other agencies were subject to customary congressional oversight it is doubtful it would have attempted to fundamentally change and regulate the 783 billion auto loan market via guidance without prior public comment or hearing answering direct and specifi c questions by Congress for nearly a year and fi rst assessing the impact of its guidance on consumers read the letter The U S Chamber of Commerce also issued a 16 page letter to the bureau on Feb 12 It outlined a list of concerns including the bureaus push to regulate dealer practices it has no jurisdiction over The bureau claims that the industrys long established method of compensating dealers for their role in bringing together lenders and auto purchasers can be used to prove disparate impact discrimination by banks and fi nancial institutions the letter stated in part By taking this position the bureau has created enormous uncertainty in the auto fi nance market threatening to raise the cost of credit and drive the industry to untested business models that could be harmful to consumers The chamber also took issue with the CFPBs guidance on abusive acts and practices Under the Dodd Frank Act the bureau was empowered to prevent organizations from committing or engaging in an unfair deceptive or abusive act or practice but the chamber said the bureau has only issued statutory language in defi ning what abusive means Additionally the letter took issue with the CFPBs statement regarding the liability of fi nance sources for the acts of service providers If passed the Consumer Financial Protection Safety and Soundness Improvement Act would authorize the chairperson of the Financial Stability Oversight Council to issue a stay of any regulation written by the CFPB until approved by the council by a two thirds vote It would also require the council to set aside a fi nal regulation prescribed by the CFPB if the council decides it is inconsistent with the safe and sound operations of fi nancial institutions Currently the council has that ability if a regulation puts the safety and soundness of the U S banking system or the U S fi nancial system at risk House Passes CFPB Reform Bill