Exactly two weeks before a consent order involving American Honda Finance Corp. came to light, documents the Consumer Financial Protection Bureau shared by anonymous sources generated online reports about the forthcoming regulatory developments.

Now, the National Automobile Dealers Association wants to know the entirety of an internal CFPB memo that sparked that initial report.

Earlier this week, NADA asked the CFPB to make public an agency memo that appears to “plainly undermine” the bureau's “long-standing claims” that it is not targeting dealers through enforcement actions. The request was made under the Freedom of Information Act (FOIA) and signed by NADA chief regulatory counsel Paul Metrey.

According to a June 30 article published by American Banker, three senior CFPB officials sent CFPB director Richard Cordray a memo outlining how a proposed settlement with American Honda Finance would further the agency's “goal” of “significant[ly] limiting dealer discretion.”

The report indicated Jeffrey Morrow, Jane Peterson and Rebecca Gelfond wrote in a June 16 memo to Cordray about the proposed Honda settlement and stating, “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.”

Dealer discretion is the amount of a vehicle installment contract the dealer is able to discount at the retail level for a customer. Since this type of discounting begins and ends at the dealership, NADA insisted any targeting of dealer discretion is tantamount to regulating what actions a dealer is permitted or not permitted to take.

NADA officials reiterated the Wall Street Reform and Consumer Protection Act — better known as Dodd-Frank — specifically prohibits the CFPB from regulating dealers.

Yet NADA president Peter Welch contends the bureau's actions have caused many, including both Republican and Democratic members of Congress, to question whether the CFPB has attempted to skirt its jurisdictional boundary in an effort to regulate dealers.

"If true, the statements made by senior CFPB officials in this memo directly contradict repeated statements, including testimony before Congress, from director Cordray that he is aware and respectful of his Congressional mandate not to regulate dealers,” Welch said.

“Consumers benefit tremendously from dealer discounts, so they deserve to know if these discounts are in danger of being unjustly and unfairly eliminated by overzealous Washington regulators,” he added.

NADA added the memo, as well as proposed consent orders against Honda and two other captive finance sources, appear to have been leaked to American Banker, as only some of the documents referenced in the article are in the public domain. The consent order with Honda was released on Tuesday.

A copy of NADA's letter to the CFPB’s chief FOIA officer is available here.

In a previous message to SubPrime Auto Finance News, CFPB communication director Jen Howard offered this statement regarding the information obtained by American Banker.

“Our enforcement process is confidential and we take any breach of that confidentiality very seriously," Howard said. "We are referring this matter to the Office of the Inspector General for further investigation and will cooperate fully.”