Congress Scraps Consumer Bureau Rule Targeting Auto-Lending Bias
(Bloomberg) -- The U.S. House moved to kill an Obama-era policy aimed at preventing discrimination in auto lending, sending the measure to President Trump’s desk to be signed into law.
Lawmakers voted Tuesday to reverse a Consumer Financial Protection Bureau directive that put restrictions on interest-rate markups car dealers charged for some auto loans. Majority Republicans used an obscure procedure to overturn the 2013 guidance, which they saw as an effort by then-CFPB Director Richard Cordray to bypass normal rule-making.
Cordray, a Democrat now running for governor of Ohio, said at the time that markups on auto loans were routinely higher for minorities and warned that the consumer bureau might punish firms for violating fair lending laws. Auto dealers defended the markups as a standard practice that ultimately makes car purchases available to more people.
Targeting the bureau’s directive as a rule in disguise, Republicans in the House and Senate invoked the Congressional Review Act, which allows lawmakers to scrap regulations within 60 working days of their adoption. The Government Accountability Office agreed last year that the guidance was essentially a rule and that it could be subject to reversal under the review law.
Republicans may be looking to expand their use of the Congressional Review Act to reverse measures enacted when Democrat Barack Obama was president. Lawmakers last year reversed a CFPB rule meant to make it easier for consumers to join class actions lawsuits against banks over alleged mistreatment. They are also considering using the law to overturn other Obama-era policies, including leveraged lending guidance issued by the Federal Reserve.
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