Reforming CFPB Indirect Auto Financing Guidance Act

Floor Speech

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Mr. Chairman, I do rise to oppose H.R. 1737. I have listened very carefully to my colleagues, and I am very sympathetic and empathetic to their desire to help their auto dealers. Too bad this legislation doesn't do that.

I also agree with the proponents of this bill that the CFPB can't directly regulate auto dealers, and I don't think the CFPB wants to regulate auto dealers.

The problem with this bill is that it doesn't help auto dealers, and it is not a response to CFPB regulatory overreach. What the CFPB does have jurisdiction over is the Equal Credit Opportunity Act.

A few years ago, the Bureau noticed a funny thing: that minorities were paying higher markups on auto loans, even when you control for credit risk and other factors, discounts. They noticed if you were Jesus Rodriguez or Barack Obama Jones that somehow you paid a higher price for the car.

Now, the problem is that this legislation attempts to free the auto dealers from discrimination. Of course, discrimination is a violation of the Equal Credit Opportunity Act. The CFPB and the Department of Justice brought actions against these lenders for violations of ECOA.

We heard from the other side that there was no evidence that these car dealers had done anything wrong. No, because it didn't go to court. That is why there was no evidence. It went to settlement, and they settled for $140 million.

Pretty simple, the CFPB protected borrowers from discrimination and then put out helpful guidance.

So why are we here today, Mr. Chairman? We are here considering this legislation so that auto dealers can violate the ECOA.

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