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Yesterday, the CFPB finalized its larger participant rule for nonbank auto finance companies, making them subject to supervision after the effective date of the rule.  But the Bureau’s press release and newly-released auto finance examination procedures, to me, are even more significant, because they signal areas of future concentration for the Bureau in examinations of both banks and nonbanks in the auto finance space.… Continue Reading

Just in time for the holiday weekend, the CFPB released its Spring 2015 rulemaking agenda last Friday.  The agenda sets the following timetables:

Prepaid financial products.  In November 2014, the CFPB issued a proposed rule for prepaid financial products, including general-purpose reloadable prepaid cards and certain digital and mobile wallets.  The agenda indicates that the CFPB expects to issue a final rule in January 2016.… Continue Reading

A study of indirect auto financing commissioned by the American Financial Services Association found that the CFPB’s proxy methodology for measuring disparities in auto dealer reserve is “conceptually flawed in its application and subject to significant bias and estimation error.”  Among the study’s other key findings was that the CFPB’s preferred alternative dealer “compensation” methods, namely the use of a fixed fee, fixed percentage of the amount financed, or hybrid of the two, may increase the cost of credit for consumers.… Continue Reading

Along with its proposed larger participant rule for the auto financing market, the CFPB recently issued a special edition of Supervisory Highlights (“report”) describing its fair credit supervisory activity in what it characterizes as “the indirect automobile lending market.”

The report indicates that CFPB supervisory examination teams have been conducting targeted Equal Credit Opportunity Act compliance reviews of “indirect auto lenders. … Continue Reading

The CFPB has issued a proposal to supervise nonbank companies that qualify as “larger participants of a market for automobile financing.”  Comments on the proposal will be due 60 days after its publication in the Federal Register.

The proposal is based on the CFPB’s authority to supervise nonbank entities considered to be “a larger participant of a market for other consumer financial products or services.”… Continue Reading

Since the CFPB issued its guidance on indirect auto finance in March 2013, lawmakers and industry have been asking the CFPB to provide details concerning its methodology and proxies for analyzing potential fair lending violations. While the CFPB has provided some information in response to letters from lawmakers, its responses have left many questions unanswered.… Continue Reading

A bipartisan group of fourteen House members have introduced a bill (H.R. 5403) that would nullify the CFPB’s indirect auto finance guidance issued in March 2013 and require the CFPB to provide for a notice and comment period before issuing any new guidance on indirect auto finance. 

Entitled the “Reforming CFPB Indirect Auto Financing Guidance Act,” the bill also includes requirements for the CFPB when proposing and issuing such guidance to (1) make publicly available “all studies, data, methodologies, analyses, and other information” it relied on, (2) consult with the Fed, FTC and DOJ, and (3) conduct a study of the guidance’s impact  on consumers and “women-owned, minority-owned, and small businesses.”… Continue Reading

The Senate Committee on Banking, Housing, and Urban Affairs will hold a hearing tomorrow on “Wall Street Reform: Assessing and Enhancing the Financial Regulatory System.” 

The list of witnesses includes CFPB Director Richard Cordray.  He is likely to be questioned about upcoming CFPB initiatives, including the proposed larger participant rule for auto finance that the CFPB is expected to release next week in conjunction with its September 18 field hearing on auto finance. … Continue Reading

The CFPB has announced that it will be holding a field hearing on auto finance on September 18 in Indianapolis.  The announcement indicates that the hearing will feature remarks from Director Richard Cordray, as well as “testimony” from consumer groups, industry representatives, and members of the public.

Given the CFPB’s history of using field hearings as the venue for announcing a related development, it seems highly likely that the field hearing will coincide with the CFPB’s release of a proposed larger participant rule for the auto finance market. … Continue Reading

Yesterday, the CFPB announced a consent order with First Investors Financial Services Group, Inc., an auto finance company that both makes loans to consumers and purchases retail installment sale contracts from auto dealers. Under the terms of the consent order, First Investors agreed to pay a $2.75 million civil penalty relating to allegations that it knowingly failed to fix flaws in a computerized credit reporting system it had purchased from a third-party vendor.… Continue Reading