Senators Seek Answers from CFPB on 'Guidance' That Threatens Consumer Benefits of In-Dealership Financing
WASHINGTON, Oct. 30, 2013 /PRNewswire-USNewswire/ -- Twenty-two U.S. Senators—11 Democrats and 11 Republicans—are asking the Consumer Financial Protection Bureau (CFPB) for greater transparency to justify its effort to eliminate an auto dealer's ability to discount a customer's auto loan interest rate, the National Automobile Dealers Association (NADA) reports.
The letter, led by Sens. Rob Portman, R-Ohio, and Jeanne Shaheen, D-N.H., follows several prior Congressional inquiries by House Democrats and Republicans asking whether the Bureau had studied the impact on consumers if the extraordinary competitive benefits of in-dealership financing are eliminated.
On March 21, the CFPB—without public comment or formal rulemaking—issued fair lending "compliance guidance" that pushes lenders to eliminate the ability that dealers currently have to "meet or beat" a competitor's rate.
"The CFPB refuses to explain to Congress or the public the need to restructure a highly competitive and efficient marketplace that saves car and truck buyers enormous amounts of money every year," said David Westcott, chairman of the National Automobile Dealers Association (NADA), and a Buick-GMC dealer in Burlington, N.C.
The Portman-Shaheen letter follows two separate letters sent to the Bureau this spring by Rep. Terri Sewell, D-Ala., and 12 House Financial Services Committee Democrats and former House Financial Services Committee Chair Spencer Bachus, R-Ala., and 34 House Republicans.
The bipartisan group of 22 Senators is pressing the CFPB for additional information because "unfortunately, the Bureau has not provided complete responses to several of the questions presented to it by our House colleagues," according to the letter.
"The CFPB's actions threaten to eliminate 17,000 price discounters from the auto finance marketplace without justification or transparency," Westcott said.
"Auto dealers from across the country applaud the bipartisan leadership of Sens. Portman and Shaheen. We hope that having over 1/5 of the U.S. Senate request this information will prompt the CFPB to finally answer the important question of how reducing competition for auto loans is beneficial for consumers," Westcott added.
Click here for the letter.
SOURCE National Automobile Dealers Association