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From Banking and Finance Law Daily, April 18, 2018

Consumer groups oppose Senate vote to rollback auto lending guidance

By Katalina M. Bianco, J.D.

Consumer groups are speaking out against the scheduled Senate vote to use the Congressional Review Act to strike down Consumer Financial Protection Bureau guidance on auto lending that has been in place since 2013. The Senate is slated to begin consideration of S.J.Res.57, a joint resolution providing for congressional disapproval of the Bureau’s guidance entitled "Indirect Auto Lending and Compliance with the Equal Credit Opportunity Act" (see Banking and Finance Law Daily, March 26, 2018).

Coalition complaints. A coalition of 64 organizations sent a letter to lawmakers stating that the Senate vote "would contravene the clear intent of the CRA to allow Congress to review and challenge recently finalized agency actions" and "set a dangerous precedent" allowing Congress to attack well-settled agency actions that have been in effect for years. Further, they wrote, "This Congress has used the CRA to repeal 15 public protections, but the CRA process never has been used to target settled agency actions or nonbinding guidance documents."

CRL. The Center for Responsible Lending stated, "Car lending industry and their allies in Congress have consistently attacked the CFPB auto lending guidance despite clear evidence showing that, for decades, car dealer markups have led to discriminatory lending." The CRL also published statements by several civil rights organizations urging the Senate to vote against "repealing guidance that protects against unlawful discrimination."

Allied Progress. "Co-sponsors of the legislation have taken at least $5,185,162 from the auto industry while hard data [shows] enormous racial disparities in auto loan markups in their respective states," Allied Progress charged. The organization published statistics from the National Consumer Law Center on funds they say the co-sponsors of S.J. Res. 57 received from the automotive industry. "This discrimination is pervasive and the CFPB’s guidance would help to end it. Unfortunately, the auto industry is in the driver’s seat in the Senate and people of color are the ones being taken for a ride," said Karl Frisch, executive director of the consumer group.

Americans for Financial Reform. The Americans for Financial Reform said auto lending has "a long and sordid history of making nonwhite borrowers pay more than similarly situated white borrowers—often agreat deal more. Against that background, a vote in favor of the Senate measure would be tantamount to an endorsement of racial discrimination."

Companies: Allied Progress; Americans for Financial Reform; Center for Responsible Lending; National Consumer Law Center

MainStory: TopStory CFPB EqualCreditOpportunity Loans

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