WASHINGTON, D.C. – Today, the U.S. House of Representatives voted to pass S.J. Res 57, a Congressional Review Act (CRA) resolution to undo the Consumer Financial Protection Bureau’s (CFPB) 2013 indirect auto lending guidance, which was put in place to limit the discriminatory impact of dealer interest rate markups in the auto lending market. This is a first-of-its-kind vote, abusing the streamlined procedures of the CRA to try to undo longstanding guidance issued more five years ago. The CRA resolution is expected to be signed by the President.
The effort to eliminate this important consumer protection comes on the heels of a recent investigative report released by the National Fair Housing Alliance (NFHA) detailing the ongoing racially discriminatory practices that exist in auto lending. In their findings, NFHA uncovered that more than half the time white borrowers with weaker credit profiles received less expensive pricing options and more favorable treatment than their non-white counterparts who were more financially qualified.
Center for Responsible Lending Senior Policy Counsel Rebecca Borné released the following statement:
Members of Congress who voted to nullify this important consumer protection just sent a clear message to the public that it’s ok for auto dealers to give customers a higher priced car loan simply because of the color of their skin.
Years of data make clear that racial discrimination harms the economic viability of families of color, especially those who are low-income, where a car is often one of the biggest purchases made by a household. The CFPB has found discriminatory pricing in the auto financing market and should have the ability to use the full range of its regulatory tools and authority to address it.
Overturning the auto lending guidance just opened the door to uncertainty across federal agencies that use rules and guidance to protect the public from financial predators. It also demonstrates how the CRA has been used by narrow corporate interests to steamroll the public interest. The CRA, which has been used more than a dozen times since January 2017, allows politicians to quickly dismiss agency protections that were thoughtfully crafted, often based on years of research and stakeholder input.
For more information, or to arrange an interview with a CRL spokesperson on this issue, please contact Ricardo Quinto at email@example.com.