The Consumer Financial Protection Bureau (CFPB) has published a rule that expands the CFPB’s supervision to nonbank auto finance companies for the first time. The CFPB currently supervises automobile financing at the largest banks and credit unions. Pursuant to the CFPB’s authority under Dodd-Frank, the new rule extends the CFPB’s supervision to nonbank auto finance companies that make, acquire or refinance 10,000 or more loans or auto leases a year by defining these nonbank auto financing companies as a “larger participant.”
The CFPB estimates that the new rule will allow it to supervise about 34 of the largest nonbank auto finance companies, which originate around 90 percent of nonbank auto loans and leases. As explained in the CFPB’s press release, the new rule targets the fair marketing and disclosure of auto financing terms, accurate reporting to credit bureaus, fair debt collection practices, and fair lending practices.
The National Automobile Dealers Association is currently supporting legislation in the U.S. House of Representatives to halt the CFPB’s efforts to supervise indirect auto lending. The “Reforming CFPB Indirect Auto Financing Guidance Act”, H.R. 1737, would nullify the CFPB’s prior Bulletin published on March 21, 2013 regarding indirect auto lending. As of June 22, the bill has 98 cosponsors. Combined with legislative efforts to intervene in the CFPB’s TILA-RESPA Integrated Disclosure regulations, H.R. 1737 appears to signal a growing concern from Congress about the CFPB’s regulatory actions.
The new rule, which was initially proposed in September 2014, will take effect 60 days after publication in the Federal Register.