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From Banking and Finance Law Daily, May 8, 2018

Repeal of auto lending guidance is ‘lucky 16’: Ryan

By Katalina M. Bianco, J.D.

Speaker of the House Paul Ryan (R-Wis) is anticipating another repeal of "burdensome Obama-era regulations" as the House prepares to vote on a resolution that would rescind the Consumer Financial Protection’s Bulletin No. 2013-02, "Indirect Auto Lending and Compliance with the Equal Credit Opportunity Act (see Banking and Finance Law Daily, May 7, 2018). Referring to the 15 repeals of regulations using the Congressional Review Act thus far, Ryan said this vote is "lucky 16."

The House vote is scheduled for the upcoming week. H. Rept. 115–664, a report that sets the rule for House debate on the resolution, has been released. The resolution provides one hour of debate equally divided and controlled by the chair and ranking minority member of the House Financial Services Committee.

Ryan said the House will vote to "restore competition and fair lending for auto dealers that enable customers to indirectly finance their car payments." The Bureau’s guidance was based on a "flawed assessment," the Speaker said, and was issued "without examining how meddling in the auto lending marketplace could potentially raise borrowing costs for consumers."

Ryan referred to a report from the House Financial Services Committee that states that the guidance is "a textbook example of how regulators that don’t understand business and economics can harm the very consumers they intend to protect."

ABA in agreement. The American Bankers Association wrote to Ryan and Minority Leader Nancy Pelosi (D-Calif) to express support for the resolution. The ABA stated that while all customers should be treated fairly, the Bureau issued the bulletin "without the opportunity for public comment on its legal underpinnings, critical review of its assumption and bases, and its impact on consumer access to convenient and affordable credit." Because of the regulatory uncertainty, many banks have cut back or stopped their indirect auto lending, leaving customers with limited choice and increased costs.

Competitive Enterprise Institute. The Competitive Enterprise Institute called the guidance "one of the Consumer Financial Protection Bureau’s worst regulatory actions" and urged Congress to "axe" the bulletin using the CRA. The guidance "has become a symbol for everything that is wrong with modern administrative agencies," the institute asserted. The CEI wrote that the Bureau used the guidance "to effectively rewrite the Equal Credit Opportunity Act" by extending liability to auto finance companies for practices never considered liable under the ECOA.

Companies: American Bankers Association; Competitive Enterprise Institute

MainStory: TopStory CFPB ConsumerCredit EqualCreditOpportunity Loans

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