Regulators have grown so aggressive with enforcement that many auto lenders now have a “fear of retribution” if they even talk publicly about compliance.
Lenders tell Auto Finance News that this “fear of retribution” is real. One CEO of a subprime lending company told us that a review by the Consumer Financial Protection Bureau appeared to have been spurred by some public statements that the company official made. This occurred despite the company’s long years of sterling regulatory compliance and fair lending performance.
“This is big government gone bad,” said a source, who requested anonymity for fear, he said, that the CFPB will target his company. “It has become a battle royale between regulators. Each is looking to outdo the next regulator. There is a lot of money to be made. It is crazy.”
This “fear” is becoming pervasive.
“The industry participants are mortified of saying anything because of the fear of retaliation,” a source said, who added that his legal advisers urged him not to speak out about CFPB aggression.
This has been the summer of enforcement. Back in the spring, we reported that at least six auto lenders were said to be under CFPB scrutiny for enforcement action. Indeed, First Investors Financial Group paid a fine to the CFPB for purportedly failing to accurately report information to the credit bureaus. Meanwhile, Santander Consumer USA and General Motors Financial Corp. were hit with subpoenas from the Department of Justice for unknown reasons, although it is suspected that they stem from lending practices at the companies. DOJ has told Auto Finance News that there “could be other” subpoenas.
All this has lenders in nothing short of a state of fright, with no one offering a strong voice in favor of the industry.
