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House of Representatives Repeals CFPB Auto-Loan Financing Regulatory Guidance's picture
Commentary by Steven Lofchie

The House of Representatives voted to withdraw the Consumer Financial Protection Bureau ("CFPB") regulatory guidance on auto-loan financing using Congressional Review Act ("CRA") authority. The Joint Resolution passed the House by a vote of 234 to 175 and was sent to the President for his signature.

As previously covered, this guidance, although not a formal rule, allowed the CFPB to pursue legal claims against car dealerships that allegedly charged minority consumers higher interest rates on their auto loans. The CFPB avoided the Administrative Procedures Act's rulemaking process and related requirements by enforcing this regulatory guidance rather than developing a rule.

In remarks before the House of Representatives, House Financial Services Committee Chairman Jeb Hensarling (R-TX) supported the repeal, alleging that the CFPB's application of the guidance violated (i) Dodd-Frank Section 1029, which prohibits the CFPB from regulating auto dealers, and (ii) the Administrative Procedures Act, by issuing guidance rather than adhering to the designated rulemaking process.

Representative Maxine Waters (D-CA) argued against the repeal and asserted that the guidance (i) served its intended purpose by providing "clarity to indirect auto lenders," and (ii) regulated auto lenders, not dealers. Ms. Waters further claimed that using the CRA to repeal this guidance is a "clear overreach," and that the CRA was not designed to serve this purpose.


Notwithstanding Rep. Waters' dramatic statement, if the guidance is less than a rule, then use of the CRA to withdraw the guidance should be less impactful than use of it to withdraw a rule. The power to do the greater implies the power to do the lesser.  

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