Showdown Brewing for CFPB and Auto Industry
The ongoing confrontation between the Consumer Financial Protection Bureau (CFPB) and automotive retailers and lenders is heating up, with two events in Washington this week and a disclosure from Ally Financial Inc. last week that illustrates the growing tension.
Automotive News reported that CFPB Director Richard Cordray likely will face some critics in the U.S. Senate on Tuesday (Nov. 12) when he gives the Senate Banking Committee the bureau’s semiannual report. Some senators — including six of the 20 committee members — and U.S. representatives have exchanged letters with Cordray in recent weeks, pressing for more details on the bureau’s methodology — an implied criticism of what the CFPB’s detractors see as a lack of transparency.
Then on Thursday, the bureau plans to host an auto finance forum at its Washington headquarters. The event comes in the wake of Ally’s disclosure, in a filing with the Securities and Exchange Commission (SEC), that the CFPB believes Ally and “other automobile finance companies” have failed to fulfill what the CFPB defines as the lenders’ obligation to prevent dealers from engaging in discrimination.
Ally has acknowledged in SEC documents this year that the CFPB was “investigating certain of our retail financing practices.” But the latest filing provides more detail and puts the case in more serious terms.
“In connection with these investigations, the staff of the CFPB has recently advised us that they believe we have an obligation to prevent independent automotive dealers with which we do business from engaging in certain retail financing practices that the CFPB staff believes violate the anti-discrimination provisions of the Equal Credit Opportunity Act, and that they believe we have failed to fulfill this obligation,” the filing said.
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