President Trump Signs CFPB Repeal into Law
Last week, we shared the news that Congress repealed the CFPB’s March 2013 Bulletin which provided guidance regarding indirect auto lending and compliance with the Equal Credit Opportunity Act.
The bipartisan resolution, S.J. Res. 57, was signed into law by President Trump this Monday, May 21st.
Both the Republicans and Democrats who took action used the Congressional Review Act to reverse the federal rule. This method comes with the added benefit that the CFPB will be prohibited from creating or implementing a comparable measure at any point down the road.
In a blog post, President and CEO of NADA Peter Welch stated, “This is a great day for consumers, as Congress and the President have helped to preserve their ability to receive auto loan discounts from local dealerships. NADA congratulates the U.S. House and Senate for their focus and perseverance on this issue, and the President for signing the new law to protect consumers.”
Under the Microscope at the State Level
Although some questioned the legitimacy of studies driving the enactment of the CFPB’s bulletin, even the agency’s authority over the auto industry, the road ahead continues to presents new challenges.
Back in December, a letter on the matter was sent to President Trump from the attorneys general of 16 states, including New York and California, along with the District of Columbia.
In it, the group affirmed that if the bulletin was repealed, they would “pick up where they perceive the [bureau] is leaving off,” according to Danielle Fagre Arlowe, senior VP of state government affairs for the American Financial Services Association.
Moving Forward, Next Steps for Dealers
While the repeal has now been officially signed by Trump, the situation continues to unfold. With this in mind, NADA recommends that dealers follow their Fair Credit Compliance Policy & Program. This would mean using a fixed percentage for dealer reserve and only offering consumers discounts that can easily be backed by rational and widely acceptable reasoning.
Bottom line? It seems that the smart move is to watch and wait. It may not take long for state attorneys general to reveal their next steps. We should know fairly soon if they plan to act or if their letter was just standard political bluster.
Stay tuned for more updates as the news comes in.