The CFPB’s auto fair lending guidance continues to draw criticism from members of Congress, most recently from Congressman Blaine Luetkemeyer, a member of the House Financial Service Committee.  

In a November 15 letter to Director Cordray, Mr. Luetkemeyer challenged the CFPB for not having studied how a shift to flat fee compensation for dealers would affect the cost of credit to borrowers, particularly low-and moderate-income borrowers.  Director Cordray, responding earlier this month to a letter from a bipartisan group of 22 U.S. Senators raising concerns about the guidance and asking about the extent to which the CFPB had looked at how flat fees would affect the cost of credit for consumers, indicated that the CFPB had not studied “how market-wide adoption of a single non-discretionary compensation program would affect the availability of credit.” 

The likelihood that the CFPB’s guidance would increase costs for consumers was something we flagged just a week after the guidance was issued.  Mr. Luetkemeyer stated in his letter that “[i]t is imperative that the Bureau take the opportunity to conduct an in-depth study on this issue.”