CFPB Targeted Markup From Outset, Rep. Hultgren Says
Congressman Randy Hultgren accused the Consumer Financial Protection Bureau of pursuing dealers through enforcement actions against auto lenders “from the beginning,” he said during Wednesday’s Congressional hearing for the 2016 Semiannual Report of the CFPB.
“You’ve always testified to the effect that you only regulate lenders, and that you’re careful not to step over that line, but we now know that answer is hogwash,” he said to CFPB Director Richard Cordray, a witness at yesterday’s hearing. “How do we know this? Well, because we have your documents.”
Hultgren was referring to documents not previously released by the House Financial Services Committee. One document — which Hultgren referred to as “the smoking gun” — contains a detailed summary of a 2012 meeting put together to discuss auto finance, and includes the line: “To figure out what to do about disparate impact, the thought is we should eliminate dealer markup.” The meeting was attended by current CFPB Fair Lending Director Patrice Ficklin and former CFPB Assistant Director Rick Hackett, he added.
“So, there you have it, notwithstanding your previous testimony, the operating theory behind all of your agency’s indirect auto efforts, from the beginning, has been to ‘eliminate dealer markup,’” Hultgren said.
While there are not necessarily any immediate or direct consequences to the accusations made during the hearing, it is possible that further inquiries or investigation into those matters could occur, John C. Redding, partner at Buckley Sandler LLP, told Auto Finance News.
Cordray, in his response Wednesday, remained adamant that the CFPB has never taken action against a non buy here, pay here dealer, and that the document refers to dealer markup as it pertains to lender practices.
“We are very careful to observe that line, but we do have a responsibility over auto lenders,” he said. “We had the dilemma about how to handle that responsibility, when they and dealers often work together.”
It is also likely that Cordray will look into some of the matters raised, Redding said, “if for no other reason than to ensure he and the Bureau are not surprised later should anything come to light.”
Despite the matters raised during the hearing, there are no further requirements for a follow-on vote or decision by either the Committee or the House as a whole, he said. “It will be interesting to see where the Committee takes this, if anywhere,” he added.
