Today, the House of Representatives voted 234-175 to overturn a Consumer Financial Protection Bureau rule that used severely flawed research methods to determine if consumers faced discrimination when purchasing vehicles. This vote is an important step toward rolling back Obama-era rules that have limited Americans access to capital and choice in the marketplace.
When Dodd-Frank was passed in 2010, it specifically blocked the newly created CFPB from regulating auto dealers. In 2013, then CFPB director Richard Cordray deceitfully went around Congress by issuing a guidance document that reclassified auto finance lenders as “creditors” when financing a loan for a consumer to purchase a vehicle.
While auto dealerships are forbidden from collecting ethnic identifiable information like race or gender, the CFPB used the names of consumers and their addresses to guess based on where they lived if they were discriminated against. Internal Bureau documents show that even staff were concerned about these methods. Regardless, the CFPB targeted businesses using these suggestive findings in an effort to extort them for millions of dollars.
In 2017, Sen. Pat Toomey (R-PA.) asked the Government Accountability Office if the “guidance” the CFPB issued on auto lending practices qualified as practical guidelines or as a “rule” based on the enforcement capability of the document. At the end of last year, the GAO determined that the guidance did qualify as a rule and is subject to the Congressional Review Act; an expedited process that allows Congress to vote for or against regulations with only a majority vote required.
ATR’s President Grover Norquist has questioned this flawed rule and its reliance on discriminatory data collection methods:
Today’s House vote shows that under the previous administration, the independent Bureau with its single director and unaccountable structure to congressional appropriations and oversight can be weaponized to target businesses for financial settlements. It is astonishing to see so many Democrats who vote against a resolution that clearly shows Richard Corday and the CFPB ignored the will of Congress mandated in Dodd-Frank to punish auto lenders who had nothing to do with the recession but who have been extorted for millions that could have been better used to lower interest rates for consumers.
The Senate voted last month on Sen. Jerry Moran’s (R-Kan.) resolution S.J.Res. 57, in a vote of 51-47 with one democrat joining republicans. ATR looks forward to President Trump signing the resolution and rolling back this destructive rule promulgated under the previous administration.