Pub. 1 Issue 4

8 www.glancda.org NADA and CFPB Take Center Stage in Washington in November Richard Cordray, director of the Consumer Financial Protection Bureau, provided the agency’s semi-annual report to Congress in testimony to U.S. Senate Banking Committee on November 12, 2013. During questioning from the Senators, Mr. Cordray admitted that the CFPB needs to provide more transparency on its methodology, but expressed concern about dealers set- ting auto loan rates. NADA President Peter Welch stressed that many factors outside of race can impact an interest rate such as the amount financed, vehicle class, whether the car is new or used, the size of the down payment, term of the loan, time of the month and automaker sales incentives, etc. Mr. Welch added that without understanding the CFPB’s com- puter modeling, there is no way to determine if their conclusions are reliable. Six of the 22 members on the Senate Banking Committee signed a letter to Mr. Cordray on October 30, 2013 expressing concern about the CFPB’s guidance issued in March 2013 “that could curtail a pro-competitive feature of the indirect vehicle financ- ing market and to request greater transparency for the bureau’s activity related to this matter.” In March, the CFPB—without public comment or formal rule- making—issued guidance that pressures lenders into compensat- ing dealers arranging financing with flat fees and eliminating any discretion dealers have to “meet or beat” a competitor. Since then, the CFPB has refused to release any of its research that supports the need to force these changes in auto lending. After multiple bipartisan requests from both the House and Senate, the CFPB admitted recently that there was no analysis performed as to how moving to flat fees will help or harm consumers. In his testimony, Mr. Welch added that consumers benefit from the current system of dealer-assisted financing because consum- ers can shop at more than 17,000 franchised new-car dealerships that have the ability to “meet or beat” interest rates offered by NADA Director’s UPDATE NADA Director’s Update