On November 17, 2022, the Consumer Financial Protection Bureau (“CFPB”) announced in a blog post that it is in seeking to build a new data set that “will allow for a more robust understanding of market trends” in the auto market. According to the CFPB, over 100 million Americans have an auto loan, and auto loan balances (currently estimated at $1.5 trillion nationally) are on pace to surpass student loans as the second-largest debt category in 2023. Notwithstanding the enormous size of this type of consumer credit, the CFPB maintains that data available to sufficiently understand the market is unavailable.
In announcing this request, “Enhancing Public Data on Auto Lending,” the CFPB stated:
Financial markets and policymakers have long had access to granular mortgage data that has provided insight into patterns in lending and risk. Because student loans are largely administered by the federal government, we know more about them too. But, despite its size, we know much less about the auto lending market. As a result, the CFPB is announcing an effort to work with industry and other agencies to develop a new data set to better monitor the auto loan market.
As an example of data gaps in the auto loan market, the CFPB has pointed to repossession data, which is based on proprietary estimates and does not provide a level of granularity that allows for a deeper analysis. The Bureau has also pointed to an inability to comprehensively study the subprime and deep subprime auto markets, since many lenders providing auto loans to consumers in those credit segments don’t furnish data on those loans to credit reporting agencies. The CFPB has expressed a clear concern about the treatment of those customer segments during the COVID 19 pandemic, and we suspect the lack of visibility into the most vulnerable consumers in the auto finance market is a major impetus for this attempt to develop a better data set. Additional examples of CFPB reports and comments regarding subprime auto loans can be found here and here.
The CFPB hopes that additional data will give it a more robust understanding of market trends, enabling it to identify emerging risks and opportunities as they occur. The Bureau hopes this will lead to a more competitive auto finance market for consumers and greater visibility into market trends and opportunities for lenders.
As of this writing, approximately two dozen comments had been received in response to the request. Posted comments can be found here. Comments posted to date are predominantly from individuals giving their two cents on the auto finance market and do not appear to add much insight as to how to address the data gaps already identified by the CFPB.
It is our hope that consumer and industry stakeholders are able to provide meaningful input that will help expand this effort by the CFPB to better understand the auto finance market during the comment period. Enhanced data and a deeper understanding of the auto finance market would certainly help inform other regulatory efforts, such as the FTC’s proposed Motor Vehicle Dealers Trade Regulation Rule.
The CFPB’s blog post includes instructions for submitting comments. Comments can be submitted on the federal rulemaking portal or directly to the CFPB by email, mail, or hand delivery to CFPB headquarters in Washington, D.C. The deadline to submit information and comments responsive to the request is December 19, 2022.