Compliance

14 AGs push back to keep CFPB complaint database publicly available

NEW YORK and WASHINGTON, D.C. - 

As the Consumer Financial Protection Bureau continues to modify how it operates, more than a dozen state attorneys general are pushing the CFPB not to change its practices regarding consumer complaints.

New York attorney general Barbara Underwood recently led a coalition of 14 attorneys general in urging the CFPB to retain its public database of consumer complaints. Underwood explained the joint letter emphasizes the numerous benefits of a public database to state law enforcement, honest businesses and the public at large. 

Underwood noted the letter was in response to a March 1 request for information (RFI) issued by the CFPB, seeking comments from the public “to assist the bureau in assessing potential changes that can be implemented to the Bureau’s public reporting practices of consumer complaint information.” 

Underwood said, “The CFPB public database represents an admirable commitment to transparency.  By moving to eliminate public access to the database, the Trump administration is yet again putting corporate interests over those of consumers, shielding corporate wrongdoing from public view.”

The letter was led by Underwood and also signed by the attorneys general of:

— California
— Delaware
— Hawaii
— Illinois
— Iowa
— Maryland
— Massachusetts
— Minnesota
— North Carolina
— Oregon
— Pennsylvania
— Vermont
— Washington

The letter also was signed by the Hawaii Office of Consumer Protection.

The attorney general actions arrived on the heels of the CFPB disbanding its Consumer Advisory Board; a move that members called a “firing.”

Along with the RFI Underwood referenced, the bureau also issued another Request for Information on its handling of consumer complaints and inquiries in April. The bureau is seeking comments and information from interested parties to assist the CFPB in assessing its handling of consumer complaints and consumer inquiries and, consistent with law, considering whether changes to its processes would be appropriate.

As of April, the bureau said it has received 1.5 million consumer complaints.

“Though the bureau is required to establish reasonable procedures to provide timely responses to consumer complaints and consumer inquiries, certain aspects of the complaint and inquiry handling processes were developed in furtherance of those statutory requirements but are not directly mandated by statute,” officials said in the April RFI.

“Mindful of the bureau’s statutory objective to provide consumers with timely and understandable information about consumer financial products and services so they can make responsible decisions, as well as its statutory obligations to establish reasonable procedures to provide consumers with timely responses and centralize the collection of consumer complaints about consumer financial products or services, the bureau has used feedback from a variety of stakeholders to establish and refine its processes over time to improve stakeholders’ experience, handle large volumes of complaints and inquiries and increase overall efficiency,” officials went on to say.

Since the complaint database went live on June 19, 2012, Underwood’s office reiterated that more than a million consumers have filed complaints, and 97 percent of these consumers received a response from the company that was the subject of their complaint. 

In the joint letter, the attorneys general underscore that:

• The large number of complaints and functionality of the database — which can allow users to narrow searches by company, state, product, etc. — have enabled their offices to identify patterns of widespread misconduct that have led to investigations into debt collection companies, student loan servicers, for-profit universities, and other companies whose misconduct was initially brought to our attention through a critical mass of complaints filed with the CFPB. 

• The database arms consumers with information so they can make informed decisions and avoid bad actors in the marketplace. 

• The database benefits responsible companies because it allows them to better understand their customers, and provides them the opportunity to identify problems and take corrective action. 

While auto financing wasn’t specifically mentioned, the bureau is still sharing some details about the complaints it’s receiving. The latest complaint snapshot offered by the CFPB just after Memorial Day focused primarily on debt collection.

Since July 2011, the bureau said it has received approximately 400,500 debt collection complaints, which is 27 percent of the total complaints the agency has received.

“Some common themes emerged in our analysis of these complaints,” the CFPB said. “For example, some people reported that there were debts on their consumer credit reports, but that they did not have prior written notice of the existence of the debt.

“Some people stated in their complaints that they felt uncomfortable disclosing personal information to people who called asking for it because they were not sure whether the person calling was a legitimate debt collector,” the bureau continued. “People also complained about the communication tactics companies used when attempting to collect a debt.”

The CFPB added that credit or consumer reporting was the most-complained-about financial product or service category in March as 37 percent of the approximately 30,300 complaints received during that month revolved around credit or consumer reporting.

Debt collection was the second most-complained-about consumer product, accounting for 27 percent of the monthly total.

The third most-complained-about financial product or service was mortgages, representing about 10 percent of complaints.

The CFPB’s public complaint database was created as part of a lengthy, thorough, and thoughtful process in which the CFPB solicited and considered the views of all stakeholders, including industry groups.  Moreover, as set forth in the letter, a public database of consumer complaints is consistent with the CFPB’s statutory mandate contained in the Dodd-Frank Wall Street Reform and Consumer Protection Act, which charged the CFPB with, among other things, collecting consumer complaints, publishing information relevant to consumer financial products and services, providing consumers with information needed to make informed financial decisions, and ensuring transparency in the consumer financial products and services market. 

Getting back to the action led by Underwood, her office pointed out that the 14 attorneys general who submitted the letter collectively represent more than 131 million Americans, or 40 percent of the U.S. population. 

According to a news release distributed by Underwood’s office, “The attorneys general expressed concern that the CFPB carefully consider facts and arguments in favor of continuing the public database, particularly in light of press reports indicating that acting director (Mick) Mulvaney may have already made up his mind to eliminate the database. In a recent speech to the American Bankers Association, acting director Mulvaney suggested that the decision to shut down the database was a foregone conclusion.”

RISC acquires Recovery Standard Training

TAMPA, Fla. - 

The compliance education and training offerings from Recovery Industry Services Company (RISC) just became much more robust.

On Tuesday, RISC announced the acquisition of Recovery Standard Training, which is curriculum created and maintained by Hudson Cook.

Officials highlighted the program will soon be added to RISC’s CARS certification and continuing education programs. Hudson Cook will continue to support and update the Recovery Standard curriculum and provide oversight and updates to the CARS curriculum, ensuring third-party vendors and lenders are kept up-to-date with the latest government regulations.

“We are excited about this transaction, which represents unification of robust education curriculum offered to the collateral recovery industry,” RISC founder and chief executive officer Stamatis Ferarolis said.

“The course material and software platform developed by Recovery Standard adds extensive value to RISC’s industry leading CARS certification program,” Ferarolis continued. “This acquisition helps standardize vendor training and certification allowing repossession companies, national forwarders and lenders access to the most comprehensive option for ongoing compliance training.”

Ferarolis went on to stress that auto finance companies expect third-party vendors to meet ongoing compliance standards while ensuring agents are annually trained and comprehensively vetted.

The addition of Recovery Standard Training, which comes one year after RISC’s acquisition of Recovery Compliance Solutions’ vendor vetting services, reinforces RISC’s commitment to consistently offer the best-in-class vendor vetting and compliance training.

Recovery Standard Training materials will be added to RISC’s CARS continuing education program over the course of the next three months. In addition, RISC will add a new course for finance companies, covering skip tracing, cyber security and repossession agent scenarios.

“I am pleased to join forces with RISC to deliver the most up-to-date compliance curriculum for third-party vendors and automotive lenders. RISC’s advocacy for professional repossession demonstrates a commitment to compliance, much like our mission at Recovery Standard Training, making it a clear choice to move forward with this opportunity and bring more unification to the collateral recovery industry,” said Brad Shrader, chief executive officer of Recovery Standard Training.

BillingTree survey shows how much CFPB concerns have diminished

PHOENIX - 

Key findings of BillingTree’s sixth annual Operations and Technology Survey involving collections, recoveries and more, are showing just how much of an impact all of the widespread changes at the Consumer Financial Protection Bureau are leaving on service providers.

For the first time in the history of the survey, BillingTree found that concerns over CFPB regulations ranked lower than all other compliance issues, including payment card industry (PCI) compliance, mandates from NACHA – The Electronic Payments Association, as well as obligations under the Electronic Fund Transfer Act (EFTA) and Regulation E.

BillingTree contends this overall trend is consistent with prior survey predictions after the emergence of the PCI 3.0 compliance rule changes in 2015.

“However, with CFPB plans to release a proposed rule concerning collectors’ communications practices and consumer disclosures (involving the Fair Debt Collection Practices Act), there is a chance this area will experience further disruption,” survey orchestrators said.

Beyond compliance concerns, BillingTree highlighted survey results — collected from more than 150 agencies of all sizes — cited innovative technologies to expand payment channels and enhance collection effectiveness as top factors for growth.

Survey results mentioned the growing consumer demand for mobile payments is driving change, with text payments cited by respondents as the most desired payment option.

However, rather than mobile text to pay being held back by technology limitations, BillingTree learned it is the perceived compliance risks putting the brakes on adoption. This technology out-ranked agent-assisted payment authorization and notification as the payment option carrying the greatest compliance risk.

One respondent stated, “These technologies are available, but with no safe harbor.”

When asked about future technology plans, the survey showed mobile device presentment and payment ranked second at 29 percent, just behind online portals at 31 percent.

Alternative forms of payment including PayPal, e-cash and Bitcoin ranked high, with 24 percent of respondents considering adoption, which suggests recover organizations are ready to embrace consumer technology trends and expand payment channels.

Consistent with prior years, the BillingTree survey indicated Interactive Voice Response (IVR) adoption continues to grow, with 36 percent relying on IVR compared to 28 percent in 2017.

BillingTree will be presenting the survey findings during a free webinar on Thursday beginning at 1 p.m. ET. Registeration can be completed here.

To request a complimentary copy of the 2018 ARM Industry Operations, Technology & Payments report, go to this website.

Trump signs resolution negating auto lending guidance

WASHINGTON, D.C. - 

The 2013 indirect auto lending guidance from what was previously called the Consumer Financial Protection Bureau now is officially off the books.

On Monday, President Trump signed into law a bipartisan Congressional resolution disapproving a rule that was in the form of guidance issued by the regulator that now calls itself the Bureau of Consumer Financial Protection about indirect auto finance company compliance with the Equal Credit Opportunity Act (ECOA) and its implementing regulation.

“I thank the President and the Congress for reaffirming that the bureau lacks the power to act outside of federal statutes,” acting director Mick Mulvaney said in a statement released by the regulator. “As an executive agency, we are bound to enforce the law as written, not as we may wish it to be. In this case, the initiative that the previous leadership at the Bureau pursued seemed like a solution in search of a problem. Those actions were misguided, and the Congress has corrected them.

“I want to make it abundantly clear that the bureau will continue to fight unlawful discrimination at every turn. We will vigorously enforce fair lending laws in our jurisdiction, and will stand on guard against disparate treatment of borrowers,” Mulvaney continued.

“I am heartened that the people, through their elected representatives, have corrected this instance of bureau overreach. I look forward to working with the Congress to bring much-needed structural accountability to the Bureau so that our cherished democratic principles are supported and the rights of every American consumer are always protected,” Mulvaney went on to say.

The stroke of Trump’s pen came with cheers from the industry.

“This is a great day for consumers, as Congress and the president have helped to preserve their ability to receive auto loan discounts from local dealerships,” National Automobile Dealers Association president Peter Welch said in this blog post.

“NADA congratulates the U.S. House and Senate for their focus and perseverance on this issue, and the president for signing the new law to protect consumers,” Welch continued.

American Financial Services Association president and chief executive officer Chris Stinebert shared a similar sentiment.

“We welcome the action of Congress and the President,” Stinebert said in a statement sent to SubPrime Auto Finance News. “We are working with our members to assess the impact on the vehicle financing industry as it continues to fully comply with all state laws and regulations on vehicle financing.”

Stinebert likely will be talking about this development and more when he appears during the 22nd annual Non-Prime Auto Finance Conference hosted by the National Automotive Finance Association beginning on May 30 in Fort Worth, Texas.

Before the measure landed on Trump’s desk, the House earlier approved S.J. Res. 57, which was written to overturn the much-criticized guidance document under the authority of the Congressional Review Act, by a bipartisan 234-175 majority. The Senate had already passed the joint resolution on April 18 by a 51-47 margin.

Mulvaney went into more detail regarding the impact of what Trump and federal lawmakers have done.

“The enactment of this Congressional Review Act (CRA) resolution does more than just undo the bureau’s guidance on indirect auto lending. It also prohibits the bureau from ever reissuing a substantially similar rule unless specifically authorized to do so by law,” Mulvaney said.

“Given a recent Supreme Court decision distinguishing between antidiscrimination statutes that refer to the consequences of actions and those that refer only to the intent of the actor, and in light of the fact that the bureau is required by statute to enforce federal consumer financial laws consistently, the bureau will be reexamining the requirements of the ECOA,” he continued.

“Today’s action also clarifies that a number of bureau guidance documents may be considered rules for purposes of the CRA, and therefore the bureau must submit them for review by Congress,” Mulvaney went on to say.

“The bureau welcomes such review, and will confer with Congressional staff and federal agency partners to identify appropriate documents for submission,” he added.

Consulting firm chooses Kennedy as part of finance expansion

RICHMOND, Va. - 

National Automotive Finance Association board member Joel Kennedy leveraged his experience and expertise into a position with a consulting firm broadening its scope into consumer finance.

Spinnaker Consulting Group, a national boutique professional services consultancy based in Richmond, Va., will expand its services into the consumer lending industry with the addition of Kennedy to the Spinnaker team of experts.

Specifically, Kennedy will lead Spinnaker’s expansion of consulting offerings into automotive and retail consumer finance. Spinnaker currently offers professional consulting services focused on service delivery, capability delivery, and risk and compliance management for clients in the financial services and healthcare industries.

“The Spinnaker team is made up of industry experts with deep experience delivering real results in their areas of expertise, and we’re thrilled to welcome Joel to our high-performing team,” said Shawn Sweeney, managing director of Spinnaker Consulting Group.

“Joel’s knowledge, background and experience will be key to expanding Spinnaker’s footprint and helping drive real results for clients in the automotive and retail consumer finance spaces,” Sweeney continued.

Spinnaker highlighted that Kennedy is a trusted consumer finance executive with decades of hands-on experience leading and executing for Fortune 100 companies and early-stage consumer finance start-ups. Most recently, he founded and served as chief operating officer of Pelican Auto Finance where he ran servicing and collections, compliance, IT, process and improvement.

Kennedy’s background also includes leadership roles in small- to large-scale Fortune 100 financial services companies running lending operations and a $50 million bank direct marketing team, directing analytical teams at Capital One, and leading quality at General Electric.

Along with being part of the leadership of the NAF Association, Kennedy also is certified as a Consumer Credit Compliance Executive by that organization, which is hosting its 22nd annual Non-Prime Automotive Finance Conference beginning on May 30.

House passes resolution effectively repealing CFPB vehicle finance guidance

WASHINGTON, D.C. - 

Now it just needs President Trump’s signature.

Much to the delight of industry leaders, the U.S. House of Representatives voted on Tuesday to repeal the Bureau of Consumer Financial Protection’s controversial 2013 guidance on indirect auto financing.

The House approved S.J. Res. 57, which would overturn the much-criticized guidance document under the authority of the Congressional Review Act, by a bipartisan 234-175 majority. The Senate had already passed the joint resolution on April 18 by a 51-47 margin.

“The CFPB’s 2013 indirect auto lending guidance was a harmful, ill-advised solution that purported to solve the problem of a disparate impact theory that only existed in some mythical CFPB fairyland,” National Independent Automobile Dealers Association chief executive officer Steve Jordan said.

“The reality is automobile dealers had a rich history of using indirect lenders to provide financial transactions in the best interests of the driving public long before the CFPB decided to interfere. NIADA is thrilled Congress has removed the CFPB from that equation,” Jordan continued.

The guidance, issued in March 2013, claimed dealer discretion on interest rates creates a “significant risk” of unintentional disparate impact discrimination and spelled out the bureau’s intention to pursue enforcement actions on that basis.

“This vote indicates that American consumers have spoken to their elected representatives to say they want competitive pricing on vehicle loans,” said Chris Stinebert, president and CEO of the American Financial Services Association, a trade association representing vehicle finance companies.

“We are an industry that competes for consumers’ trust as well as their business while helping them acquire vehicles that support their transportation needs,” Stinebert continued.

AFSA explained The CFPB’s vehicle finance lending policy, issued through guidance, directed fundamental market changes to the industry, which was already regulated by other federal agencies and state laws and regulations. AFSA added the guidance was issued without any public comment, consultation with other federal agencies or transparency.

Its repeal will once again allow dealers to set contract terms and rates for third-party financing without being subject to CFPB enforcement.

“Today’s action furthers the bipartisan effort that began more than five years ago to preserve the ability of local dealerships to offer discounted auto loans to their customers. We commend House Financial Services Committee Chairman Jeb Hensarling (R-Texas) and Rep. Lee Zeldin (R-N.Y.) for their leadership on this issue. As the measure has now cleared Congress, we look forward to the expected signature by the president,” National Automobile Dealers Association president and CEO Peter Welch said.

“The joint resolution is a measured response to the CFPB’s attempt to avoid congressional scrutiny by issuing ‘guidance’ that imposed a new policy without necessary procedural safeguards. Enactment of S.J.Res. 57 will help ensure every consumer’s right to get a discounted loan in the showroom,” Welch continued.

“Every customer deserves to be treated honestly and fairly when purchasing or financing a car or truck, and there is no room for discrimination of any kind, period. We continue to encourage all local dealerships to take up NADA’s voluntary fair credit compliance program, which is based on a U.S. Department of Justice model. It helps eliminate fair credit risk in auto lending while ensuring a competitive marketplace,” Welch went on to say.

Critics have pointed out the CFPB’s theory is based on shaky methodology for determining disparate impact, and the guidance was put in place without comments from stakeholders, public hearings or studies of its effect on the cost of credit to consumers.

“Without seeking any public comment or studying the impact on consumer credit,” NIADA senior vice president of legal and government affairs Shaun Petersen said, “and with no evidence to back up its claim, the bureau issued a rule under the guise of guidance to limit dealers’ ability to meet their customers’ needs when shopping for credit.

“We applaud Congress for taking steps to rescind the bureau’s overreach,” Petersen added.

The resolution followed a December opinion from the Government Accountability Office that defined the guidance document as a CFPB rule for the purposes of the CRA, which meant it could be struck down by a simple majority vote of both houses of Congress.

The (AIADA) today applauded the United States House of Representatives' passage of a joint resolution annulling the Consumer Financial Protection Bureau's controversial auto lending guidance, which sought to limit a consumer's ability to receive a discounted auto loan from a dealer. The resolution, already passed by the Senate, will now go to President Trump's desk for his signature.

“Today’s vote by the House is a reminder that our government can still stand up for the little guy,” American International Automobile Dealers Association President and CEO Cody Lusk said. “Auto dealerships are primarily small family businesses, and never should have been targeted by the CFPB, which has strayed from its mission of regulating massive Wall Street financial institutions.

“Today's vote allows dealers to return to offering their customers more competitive financing choices and opportunities,” Lusk went on to say.

The White House has issued a statement in support of the resolution, and President Trump is expected to sign it into law.

“CBA members are committed to ensuring strong fair lending policies and practices are in place at their banks. However, the bureau’s 2013 Auto Bulletin was a backdoor attempt at rulemaking and failed to provide banks with a clear blueprint to ensure compliance,” Consumer Bankers Association president and CEO Richard Hunt said.

“We thank Representative Lee Zeldin (R-N.Y.) for leading the effort in the House and Speaker Paul Ryan for bringing the resolution to the House floor for a vote. We also thank Senators Jerry Moran (R-Kan.), Pat Toomey (R-Penn.) and Majority Leader Mitch McConnell for their efforts in the Senate. We encourage President Trump to sign this resolution,” Hunt went on to say.

 

NY attorney general — an aggressor in automotive regulation — resigns amid abuse allegations

ALBANY, N.Y. - 

An attorney general who previously had taken aggressive regulatory and enforcement actions within the automotive space has resigned amid allegations of physical abuse against women.

According to a report published on Monday afternoon in The New Yorker, New York attorney general Eric Schneiderman resigned within three hours of the online recap of on-the-record allegations from a pair of former sexual partners of the Empire State’s top law enforcement official, plus more claims from two other women who requested anonymity.

Allegations of physical violence and explicit sexual activity filled the report, to which Schneiderman retorted: “It’s been my great honor and privilege to serve as attorney general for the people of the state of New York.

“In the last several hours, serious allegations, which I strongly contest, have been made against me,” he continued in a statement sent to SubPrime Auto Finance News. “While these allegations are unrelated to my professional conduct or the operations of the office, they will effectively prevent me from leading the office’s work at this critical time. I therefore resign my office, effective at the close of business on May 8, 2018.”

While the book might be closed on Schneiderman’s tenure as New York attorney general, he left quite a mark with actions that have connections to auto financing.

Most recently, Schneiderman sent formal inquiries regarding data security last September to Experian and TransUnion following the Equifax data breach that potentially exposed the personal information of 143 million consumers.

Not long after Volkswagen made some progress in satisfying “Dieselgate” issues with federal regulators, Schneiderman led the charge in July 2016 with lawsuits against Volkswagen as well as Audi and Porsche, saying the automakers fitted vehicles with illegal “defeat devices” that concealed illegal amounts of harmful emissions and then allegedly attempted to cover up their behavior.

In July 2015, Schneiderman raked in a multi-million dollar settlement with three dealerships in a development associated with the alleged unlawful sale of credit repair and identity theft prevention services, and other “after-sale” items. Officials explained the agreement, which returns more than $13.5 million in restitution to consumers, concludes an investigation into these dealerships for the alleged sale of finance office products to 15,000 consumers — items that in some cases added more than $2,000 in “hidden costs and fees” onto the sale or lease price of a single vehicle.

 

ARS to outsource assignments via MBSi’s repossession platform

PHOENIX and EL DORADO HILLS, Calif. - 

MBSi Corp., and American Recovery Service (ARS) recently broadened their relationship.

The repossession assignment software and vendor compliance solutions provider and national repossession services firm are expanding their partnership as ARS will soon begin outsourcing repossession assignments through MBSi’s repossession assignment platform, Recovery Connect.

The companies indicated the first phase will involve assignments from their largest client, with future phases including other MBSi clients and potentially other ARS clients as well.

Executives explained this outsourcing change can allows ARS, which currently utilizes Compliance Made Easy, MBSi’s compliance and training management platform, to more effectively manage repossession compliance down to the individual assignment level.

“We are proud to continuously exceed industry compliance standards,” ARS chief operations officer Dave Copeland said. “Outsourcing through MBSi’s Recovery Connect platform, enables ARS to provide the recovery agent with real-time account status checks, geo-updates and instant ‘on-hook’ reporting of recoveries.”

ARS and MBSi have already began the integration effort necessary to put this announcement into practice and expect to begin by migrating assignments to Recovery Connect by early summer with further MBSi clients being completed by the fall.

“ARS has long been an innovative leader in the recovery industry, and we are proud that they have chosen to expand their partnership with MBSi. It is validation that MBSi’s focus on solutions that improve the efficiency and compliance during the recovery process is taking hold,” MBSi president Cort DeHart said.

Currently more than 2,000 recovery companies utilize MBSi’s platforms, including Recovery Connect, to manage and process repossession assignments. All of these agents have access to MBSi’s Recovery Connect mobile app and will soon be able to receive ARS assignments, check statuses and transmit Smart Updates with a single button.

Additionally, as Recovery Connect is integrated with both Clearplan and RepoRoute, the agent’s assignments can seamlessly transfer to their routing solution of choice.

Wells Fargo enters consent orders with $1 billion civil penalties

SAN FRANCISCO  - 

Wells Fargo said Friday it has entered consent orders with the Office of the Comptroller of the Currency and the Consumer Financial Protection Bureau, under which the company will have to pay civil penalties totaling $1 billion.

The consent orders with the OCC and CFPB deal with matters involving Wells Fargo’s compliance risk management program in addition to “issues regarding certain interest rate-lock extensions on home mortgages and collateral protection insurance (CPI) placed on certain auto loans,” the company said in a news release.

Wells Fargo said the issues around interest rate-lock extensions and CPI have been disclosed previously.

The consent order also requires Wells Fargo to submit plans on how it is continuing to augment compliant and risk management as well as how it is approaching customer remediation.  Those plans are to be reviewed by the Wells Fargo board.

“For more than a year and a half, we have made progress on strengthening operational processes, internal controls, compliance and oversight, and delivering on our promise to review all of our practices and make things right for our customers,” said Timothy Sloan, president and chief executive officer of Wells Fargo, in a news release.

“While we have more work to do, these orders affirm that we share the same priorities with our regulators and that we are committed to working with them as we deliver our commitments with focus, accountability, and transparency,” Sloan said. “Our customers deserve only the best from Wells Fargo, and we are committed to delivering that.”

4 trade associations cheer Senate vote to repeal CFPB auto finance bulletin

WASHINGTON, D.C. - 

Four of the industry associations with significant presence on Capitol Hill celebrated on Wednesday after the U.S. Senate passed a Congressional Review Act Resolution (S.J. Res. 57) to repeal the 2013 Auto Finance Bulletin issued by the Consumer Financial Protection Bureau.

To recap, industry representatives maintained that the CFPB’s 2013 Bulletin on indirect auto financing and fair lending guidance was issued “without any public comment, consultation with other regulatory agencies or transparency." They added the 2013 bulletin created an “environment of uncertainty, where greater clarity is needed, and should have been provided as a formal notice and comment rulemaking, with appropriate input from all stakeholders.”

On Wednesday, the Senate approved S.J. Res 57 by a 51-47 vote. The vote on the resolution, under the Congressional Review Act (CRA), disapproves of the guidance.

“The vehicle finance market in the United States is a highly-competitive market, which benefits consumers as dealers and lenders discount pricing and loan rates to sell and finance new and used vehicles,” said Chris Stinebert, president and chief executive officer of the American Financial Services Association, a trade association representing vehicle finance companies. “The vote today is in the best interests of the car-buying public.”

The House of Representatives is expected to vote on its version of the bill soon, according to industry representatives.

“CBA member banks are strongly committed to ensuring fair lending policies and practices while fulfilling consumers’ financial needs. For that reason, it is critical to have clear rules and guidance from regulators so our member banks can be certain of compliance. The CFPB’s 2013 Auto Bulletin was a backdoor attempt at rulemaking without notice or comment and lacked the clarity needed by lenders,” Consumer Bankers Association President and CEO Richard Hunt said.

“We thank Senators Jerry Moran (R-Kan.) and Pat Toomey (R-Penn.) for leading the effort in the Senate and Majority Leader Mitch McConnell for bringing the resolution to the Senate floor for a vote,” Hunt continued. “We encourage the House to swiftly pass this resolution as well.”

From the dealer side, the sentiment poured in with similar tones, starting with National Automobile Dealers Association president and CEO Peter Welch.

“S.J.Res. 57 continues the bipartisan effort that began years ago to preserve the ability of local dealerships to offer discounted auto loans to their customers, and Sen. Moran is to be commended for his leadership on this issue,” Welch said.

“S.J.Res. 57 is a narrowly-tailored joint resolution that does not amend or change any fair credit law or regulation or impair their enforcement. The legislation is a measured response to the CFPB’s attempt to regulate the $1.1 trillion auto financing market, avoid congressional scrutiny by issuing ‘guidance,’ and impose a new policy without necessary procedural safeguards,” Welch continued.

“We hope this CRA resolution sees swift action in the House of Representatives, which has already demonstrated strong bipartisan support for repealing the CFPB’s flawed guidance and preserving important auto loan discounts for consumers,” Welch went on to say.

Cody Lusk, who is president and CEO of the American International Automobile Dealers Association, also shared his upbeat reaction.

“The CFPB, established to regulate Wall Street, never should have involved itself in dealership operations,” Lusk said. “Today’s vote is confirmation to dealers everywhere that the agency overreached when issuing its 2013 indirect auto financing guidance. The agency concluded, without accurate supporting data, that dealerships were using race as a determining factor when issuing loans. Today the senate has righted a wrong.”

Not all assessments about Wednesday’s developments were as rosy as what these four associations shared. For example, when asked about the Senate’s attempt to roll back the effort to prevent “discrimination” in auto-finance market, Buckley Sandler partner John Redding recently made these points.

“While the CFPB’s 2013 Bulletin on dealer markup is considered offensive by many in the industry, the Senate bill introduced last month to eliminate it is not going to change much,” Redding said.

“The pursuit to eliminate the bulletin may have more to do with the fact that the ‘industry has found it offensive that (lenders) be responsible at the finance source level for actions that they don’t undertake,” he continued.

“If you get rid of the bulletin,” Redding went on to say, “I’m not sure it changes a whole lot at the bureau except for the ability of industry to point at the bulletin and say, ‘I did everything you told me to do in your rule, and yet you are coming after me for doing exactly that.’”

Even more extreme was the negative reaction from Jerry Robinson, a former worker at Santander Consumer USA and a member of the Committee for Better Banks, which describes itself as a coalition of bank workers, community and consumer advocacy groups and labor organizations coming together to improve conditions in the banking industry.

“I worked in auto lending for almost six years,” Robinson said in a statement sent to SubPrime Auto Finance News. “Most of my customers desperately needed a car to drive to work and support their family, and Santander Consumer was all too willing to capitalize on that desperation — with tricks like impossibly high interest rates and discriminatory loans.

“The Senate’s actions today were a big win for injustice and inequality — and they endanger working communities across the United States,” Robinson added.

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