The National Automobile Dealers Association (NADA) is lobbying members of the U.S. House Financial Services Committee to pass H.R. 1737, a bill that would repeal the Consumer Financial Protection Bureau’s (CFPB) guidance on fair auto lending practices. CFPB in its view is trying to stop discrimination in auto loan rates among buyers of different races with the same credit scores.
The CFPB in 2013 issued a guidance telling auto lenders to move away from discountable compensation for auto dealers who arrange credit for their customers, and instead compensate dealers with non-negotiable payments or flat fees. If enacted by lenders, NADA claims the policy means that consumers would not be able to negotiate a lower rate on credit with their dealer in the purchase. It is alleged that for millions of consumers this would reduce access to lower interest rates on auto loans.
NADA was unable to supply to AutoInformed at this time any economic data that says current auto loan practices actually reduce auto loan rates rather than increase them. The public record shows abuses. (DOJ Honda Consent Order Aims to Cut Auto Loan Abuses, Ally Settles Auto Loan Discrimination Case, Asian Auto Lending Discrimination in Los Angeles?)
Currently 126 members of the House, which includes 70 Republicans and 56 Democrats, have cosponsored H.R. 1737, a bill introduced in April by Reps. Frank Guinta (R-N.H.) and Ed Perlmutter (D-Colo.). The legislation is identical to legislation (H.R. 5403) that had only 149 cosponsors in the 113th Congress. The auto industry has a strong local lobbying presence, of course, so another bill – window dressing or not for what appears to be a lost cause was inevitable.
