President Donald Trump today signed legislation that will undo a 2013 effort by the Consumer Financial Protection Bureau to discourage discrimination in auto lending.
Guidelines issued by the consumer bureau outlined steps that lenders should take to address discrimination by auto dealers, who often determine the terms for car loans that they help facilitate for their customers. The CFPB guidance was addressed to lenders that fall under the bureau’s jurisdiction.
President Donald Trump today signed legislation that will undo a 2013 effort by the Consumer Financial Protection Bureau to discourage discrimination in auto lending.
Guidelines issued by the consumer bureau outlined steps that lenders should take to address discrimination by auto dealers, who often determine the terms for car loans that they help facilitate for their customers.
With the backing of auto dealers and lenders, Republicans who drove the rollback argued that the CFPB should have followed formal rulemaking procedures and sought more public feedback before issuing the guidelines. The 2010 Dodd-Frank law prohibits the bureau from regulating auto dealers. The CFPB guidance was addressed to lenders that fall under the bureau’s jurisdiction.
CFPB acting Director Mick Mulvaney praised the move to rescind what he called a "misguided" initiative by his predecessor, who was appointed by former President Barack Obama.
"I am heartened that the people, through their elected representatives, have corrected this instance of Bureau overreach," Mulvaney said in a statement.
Democrats and consumer watchdogs warned that, in addition to encouraging unfair lending practices, the rollback opened a whole new front in Republicans’ deregulation drive under Trump that would be felt well beyond the CFPB.
It marks the first time that lawmakers have successfully used their authority under the Congressional Review Act to kill a regulatory action taken by an agency several years in the past, rather than within a brief window outlined by the 1996 law.
The congressional move was also novel because the law was used to take down regulatory guidance instead of a formal rule under the Administrative Procedure Act. Agencies issue informal guidance to advise businesses about how laws and rules are being implemented.
“This controversial abuse of the CRA should never have been allowed to happen in the first place," said Amit Narang, regulatory policy advocate at Public Citizen. "By signing it, President Trump is turning his back on consumers by giving auto dealers license to discriminate against minorities.”
Mulvaney, who also serves as the White House budget director, said the bureau will "continue to fight unlawful discrimination at every turn."
The CFPB said the process clarified that a number of its other guidance documents may be considered rules subject to the Congressional Review Act and that it will "confer with congressional staff and federal agency partners" to identify additional documents to submit to Congress.
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