The House of Representatives will vote today on Congressman Frank Guinta’sCFPB Indirect Auto Financing Guidance Act, H.R. 1737. The New Hampshire congressman’s bipartisan legislation would “instruct the bureau to allow public comment and to publish its data and analysis online before issuing new rules on auto financing,” which threaten the ability of car dealers to offer low rates to qualified car buyers, according to the Wall Street Journal.
Rep. Guinta introduced his bill earlier this year to help consumers save millions of dollars annually, he says.“My bill would rein in overzealous CFPB bureaucrats, who in an effort to police car purchases, are costing Granite Staters good deals.”166 cosponsors, including 65 Democrats, have signed on. More below from today’s Journal.
IN CASE YOU
Nov. 18, 2015
NOTE: The House of Representatives is scheduled later today to consider H.R. 1737, the bipartisan bill mentioned in this editorial.
On Wednesday the House is expected to vote down the Consumer Financial Protection Bureau’s extralegal campaign against the nation’s auto dealers. This is an important moment. Even Democrats are beginning to push back against the regulatory agenda crafted by President Obama and Massachusetts Senator Elizabeth Warren. Let’s hope the dissident donkeys survive the experience.
The consumer bureau has been forcing settlements on banks that provide financing via car dealers by claiming the dealers are discriminating with higher rates against minority borrowers. The bureau’s standard procedure is not to offer evidence of bias. Instead, the regulators guess the ethnicity of borrowers based on their last names and where they live, and then demand cash payments if the people they guess are black or hispanic seem to be paying higher rates than the people they guess are white. Every time we write about this policy we have to remind ourselves we work for the Journal and not the Onion.
The bureau no doubt enjoyed the headlines when it persuaded Ally Bank to fork over $80 million in damages (and $18 million in penalties) in December 2013. But once Ally put the $80 million for consumers into escrow in January 2014, this created something of a challenge for the bureau. Up to that point the regulators hadn’t had to present actual victims. What if many of the borrowers who had allegedly suffered were white? What if an honest accounting proved no one had been victimized?
Now, almost two years after Ally provided the money, it’s not clear that the alleged victims—if they exist—have been made whole. When we asked the bureau on Tuesday whether all the checks had gone out, a spokesman referred us to a message on the website of the settlement administrator. It helpfully tells borrowers: “Please be patient. It may take several months to receive and review any forms received. We anticipate payments to be issued later this year or early next year.”
According to the Journal, the government has been sending out letters lately to borrowers it is pretty sure are minorities, informing them of their good fortune but also asking them to write back if they aren’t minorities. We’re not sure the honor system will work here. But if lots of white people do turn down the windfall, all that will prove is that the discrimination claims were bogus in the first place.
At the heart of the bureau’s outrageous regulatory campaign is its March 2013 “bulletin” that effectively codified its policy against dealer discretion in setting interest rates. This Beltway diktat never went through the normal rule-making process.
But on Wednesday a bipartisan bill with 65 Democratic co-sponsors will come to the House floor. The measure would knock down this informal guidance and instruct the bureau to allow public comment and to publish its data and analysis online before issuing new rules on auto financing.
It would also require the bureau to study the costs of such a rule on various affected parties. Imagine that. As for the regulators, they’ve done enough imagining about this market. Let’s hope next time they just stick to the facts.