Trump Repeals CFPB’s Indirect Auto Lending Guidance

One month after the U.S. Senate and U.S. House of Representatives voted to repeal of the Consumer Financial Protection Bureau’s (CFPB’s) indirect auto lending guidance under a Congressional Review Act challenge, President Trump signed the resolution to make the repeal official on May 21, 2018.

The guidance, which Congress and the President have now signaled to be an overreach of the CFPB’s jurisdiction, provided that indirect auto lenders could be held liable under the Equal Credit Opportunity Act and Regulation B.  Opponents of the guidance argued it was an end run around the Dodd-Frank Act’s prohibition restricting the CFPB from regulating auto lenders.  (The guidance is explained here.)

This repeal is significant on three fronts.  First, it signals that both Congress and the President found the guidance to be an overreach.  Second, because the guidance was nullified through a Congressional Review Act challenge, the CFPB is prohibited from enacting a similar rule in the future unless it obtains Congressional authorization.  Third, and perhaps more importantly, it signals that Congress may continue to view agency “guidance” as rules subject to the Congressional Review Act.

To address the latter point, the CFPB issued a statement through Acting Director Mulvaney expressing that while the agency “will continue to fight unlawful discrimination at every turn” and “enforce fair lending laws in our jurisdiction,” Congress and the President were correct to deem the guidance a rule and repeal it.  Mulvaney explained that he will work with Congress to identify previously issued CFPB guidance that should have been first submitted to Congress for review.

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