The U.S. Chamber of Commerce is calling for the Consumer Financial Protection Bureau (CFPB) to write detailed auto lending rules in an effort to have a “cleaner road map” for making car loans. The CFPB had warned a year ago that it was probing auto-lending practices for discrimination against minorities and women; however, the new federal agency has said it doesn’t need to wire rules because current existing anti-discrimination laws are sufficient.
Autonews.com reports that in a letter last week to CFPB Director Richard Cordray, the Chamber called for the CFPB to provide auto lenders with specific rules for loans arranged at dealerships instead of forcing companies to interpret and apply guidelines tailored for individual lenders as part of "one-off" enforcement actions.
"When the CFPB uses enforcement actions to send a signal to the broader regulated community, the message doesn't always get through in a way that's useful for a person sitting at a compliance desk," Jess Sharp, managing director of the U.S. Chamber's Center for Capital Markets Competitiveness, told Automotive News.
"If the bureau identifies areas in which it wants to fundamentally alter the rules, it should take the time to write new standards rather than rely on one-off enforcement and news release 'warnings' to other regulated companies," the Chamber said.
According to the Wall Street Journal, about 80 percent of car buyers who take out auto loans do so at the time of sale through dealer-affiliated lenders. The nation's 16,000 auto dealers are able to tack on extra interest-rate charges as compensation for setting up financing for consumers and selling loans to banks.
The CFPB has said it would pursue legal cases when it finds evidence of discrimination. Auto dealers and lenders have pushed back against the suggestion the industry is engaged in widespread lending discrimination.