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From Banking and Finance Law Daily, June 3, 2013

House Seeks Information on CFPB Auto Lending Investigation

By Katalina M. Bianco, J.D.

Members of the House Financial Services Committee have written a letter to Richard Cordray, director of the Consumer Financial Protection Bureau, requesting background information on the origination of, and specifics on, the CFPB’s investigation into alleged disparate lending practices within the auto lending industry. The committee members also are seeking information about the allegations stemming from the investigations, as well as the methods the CFPB used to determine the existence of fair lending violations.

Specifically, the letter requests information from the bureau on:

  1. the method the CFPB is using to identify different groups of consumers;
  2. the factors employed to ensure the bureau’s findings that pricing differentials are attributable to a consumer’s background; and
  3. the numerical threshold used to determine the presence of disparate impact.

Guidance. The House committee members also are interested in the bureau’s compliance expectations contained in guidance that the CFPB issued to indirect auto lenders on dealer compensation policies. Issued on March 21, 2013, CFPB Bulletin 2013-02 provided guidance on compliance with the fair lending requirements of the Equal Credit Opportunity Act and its implementing regulation, Regulation B (12 CFR 1002), for indirect auto lenders that permit dealers to increase consumer interest rates and that compensate dealers with a share of the increased interest revenues. The guidance applies to both depository and nonbank institutions.

The committee members included a request that the CFPB respond by June 7, 2013.

MainStory: TopStory CFPB EnforcementActions EqualCreditOpportunity

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