CFPB’s Cordray Tries to Calm Auto Loan Conflict
This week was shaping up to be a showdown on auto finance. But from a U.S. Senate hearing Tuesday (Nov. 12) on the work of the Consumer Financial Protection Bureau (CFPB), it became clear that CFPB Director Richard Cordray wants to thaw the agency’s icy relationship with auto lenders and dealers.
Automotive News reported that Cordray, who was confirmed by the Senate in July, stood by the auto lending bulletin that the CFPB circulated in March, warning auto lenders that the agency had detected bias against women and racial minorities in interest rates. He said the agency still has “an ongoing investigatory effort” into auto lending with the Justice Department. The Recreation Vehicle Dealers Association (RVDA) is closely monitoring proceedings, as regulations could also affect third-party lending in the RV industry.
But the former Ohio attorney general also struck a conciliatory tone. Asked about the wisdom of tossing out today’s predominant auto finance model and instead paying dealers flat fees to arrange car loans, Cordray said he wants to avoid any step that would throw a wrench in car purchases or create new problems.
He also promised more “openness and transparency,” saying he agrees with the critics who say the CFPB has been too opaque in its handling of auto lending.
“We want to propose the right protections to make sure people are treated fairly, and we particularly want to make sure they’re treated on a nondiscriminatory basis, but we don’t want to dry up access to credit,” Cordray said of car loans during the Senate Banking Committee hearing. “Maintaining that balance is quite important.”
The question is whether it would be possible to reach any compromise.
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