CFPB keen on creating new auto lending data set

The Consumer Financial Protection Bureau (CFPB) is looking to build a new auto lending data set to allow for “a more robust understanding” of the growing market, which is estimated to surpass student lending outstandings in the first half of 2023, according to a Nov. 17 CFPB blog post.

The dataset may include, for example, retrospective data from a sample of lenders that represents a “cross-section” of the auto finance market, the Bureau said.

In contrast to mortgage and student lending, the auto finance industry lacks “a holistic view” of the market, which prevents market participants such as lenders and investors from “identifying emerging risks and opportunities as they occur,” according to the Bureau.

The Bureau points to a lack of transparency in the mortgage market as one of the key issues leading up to the Great Recession in 2008 that saw credit markets collapse and was the impetus behind the CFPB’s creation. The Bureau since then “took steps to expand and combine mortgage lending data sets,” according to the post

“Financial markets and policymakers have long had access to granular mortgage data that has provided insight into patterns in lending and risk,” the Bureau said. “Because student loans are largely administered by the federal government, we know more about them too. But, despite its size, we know much less about the auto lending market.” Available commercial data is sparse and highly aggregated, making it difficult for market participants to conduct independent analysis and summaries, the Bureau noted.

The CFPB is soliciting public comment until Dec. 19 under Docket No. CFPB-2022-0075. Participants can submit comments through the Federal eRulemaking Portal, email or mail.

Public comments

So far, the Bureau had received nine public comments to mixed results. One commenter lauded the move, saying inventory concerns have paved the way for dealers to “price gouge.”

Another struck down the idea, saying, “The Government has no need to gather this data and it is a breach of trust between consumer and lender to have everything we do reported to our government which is supposed to stay out of our lives.”

The CFPB has taken an increased interest in auto finance this year as interest rates and vehicle values continue to rise. The Bureau is, for one, concerned that subprime consumers are getting priced out of the market and views refinance as a tool to help increase competition.