[Congressional Record Volume 161, Number 170 (Wednesday, November 18, 2015)]
[House]
[Pages H8297-H8311]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
REFORMING CFPB INDIRECT AUTO FINANCING GUIDANCE ACT
general leave
Mr. HENSARLING. Mr. Speaker, I ask unanimous consent that all Members
may have 5 legislative days within which to revise and extend their
remarks and submit extraneous materials on the bill (H.R. 1737) to
nullify certain guidance of the Bureau of Consumer Financial Protection
and to provide requirements for guidance issued by the Bureau with
respect to indirect auto lending.
The SPEAKER pro tempore (Rodney Davis of Illinois). Is there
objection to the request of the gentleman from Texas? There was no
objection.
=========================== NOTE ===========================
November 18, 2015, on page H8297, the following appeared: by the
Bureau with respect to indirect auto lending. The SPEAKER pro
tempore. Pursuant
The online version should be corrected to read: by the Bureau
with respect to indirect auto lending. The SPEAKER pro tempore
(Rodney Davis of Illinois). Is there objection to the request of
the gentleman from Texas? There was no objection. The SPEAKER pro
tempore. Pursuant
========================= END NOTE =========================
The SPEAKER pro tempore. Pursuant to House Resolution 526 and rule
XVIII, the Chair declares the House in the Committee of the Whole House
on the state of the Union for the consideration of the bill, H.R. 1737.
The Chair appoints the gentleman from Texas (Mr. Poe) to preside over
the Committee of the Whole.
{time} 1344
In the Committee of the Whole
Accordingly, the House resolved itself into the Committee of the
Whole House on the state of the Union for the consideration of the bill
(H.R. 1737) to nullify certain guidance of the Bureau of Consumer
Financial Protection and to provide requirements for guidance issued by
the Bureau with respect to indirect auto lending, with Mr. Poe of Texas
in the chair.
The Clerk read the title of the bill.
The CHAIR. Pursuant to the rule, the bill is considered read the
first time. The gentleman from Texas (Mr. Hensarling) and the
gentlewoman from California (Ms. Waters) each will control 30 minutes.
The Chair recognizes the gentleman from Texas.
{time} 1345
Mr. HENSARLING. Mr. Chairman, I yield myself such time as I may
consume.
Mr. Chairman, I rise today in support of H.R. 1737, the Reforming
CFPB Indirect Auto Financing Guidance Act. It is an important,
bipartisan bill cosponsored by 166 Members of the House, including 65
Democratic Members. It was approved by the Financial Services Committee
that I chair with strong bipartisan support, including more than half
of the committee's Democratic members who voted.
If Congress means what it says when we write a law, then the CFPB
cannot be allowed to willfully ignore the law. Without this bill, the
CFPB would have done a blatant end run around the Dodd-Frank Act as
well as the Administrative Procedure Act.
I would like to thank Representative Guinta of New Hampshire and
Representative Perlmutter of Colorado for their leadership in providing
the CFPB with an opportunity to live up to its claim of transparency
and accountability. I want to thank the gentleman from Texas (Mr.
Williams) as well for his outstanding work on this bill.
The CFPB's flawed bulletin on indirect auto lending attempts to
regulate compensation paid to auto dealers despite the fact that auto
dealers were specifically exempted in the Dodd-Frank Act from CFPB
rulemaking.
By using this bulletin, the Bureau went far beyond merely clarifying
existing law and instead, in trying to make new policy through this
guidance, did this without using the normal rulemaking process and
without public input.
This is an affront, Mr. Chairman, to due process. This is an affront
to the rule of law and to basic fairness. Furthermore, the CFPB has not
been transparent in revealing the methodology it used to determine
whether fair lending violations existed in the auto finance market.
It took a year of constant pressure from Members of Congress and 13
different letters from 90 Democrat and Republican Members to get the
CFPB to finally provide documentation regarding its disparate impacts.
In the white paper ultimately provided by the CFPB, they admitted
that their own proxy methodology for determining racial disparities is
flawed and overestimates the number of African Americans by perhaps as
much as 20 percent. Outside statisticians at the well-respected Charles
River Associates found the figure could be off by as much as 41
percent.
According to a series of three articles published this past September
in the American Banker, internal agency documents show the CFPB was
aware that their disparate impact methodology significantly overstates
racial impact. In other words, Mr. Chairman, they knowingly used junk
science and may have no evidence of unintentional discrimination based
on the disparate impact theory.
In those same internal memos, the American Banker newspaper also
found that unaccountable CFPB bureaucrats
[[Page H8298]]
chose to disregard the explicit exemption of auto dealers that
Democrats, when they had a supermajority in both the Senate and the
House and controlled the White House, put into Dodd-Frank.
They chose to disregard the formal rulemaking requirement set out by
the Administrative Procedure Act and instead used high-profile
enforcement actions against large auto lenders to pressure them to
lower the caps they set on dealer reserve.
Now, not only does this call into question the CFPB's attempts to
police the fairness of auto loans, its preferred outcomes will
obviously increase costs for consumers.
As was noted earlier, the CFPB has pressured finance companies to
lower the caps they set on dealer reserve or eliminate this discretion
altogether. However, under this pricing model, The Wall Street Journal
recently revealed that interest payments for some consumers could
increase by as much as $580 over the life of the loan.
This shows the dire need for the CFPB to follow a transparent process
when issuing any subsequent auto finance guidance. That is what H.R.
1737 will ensure.
The bill is a simple bill. It requires the Bureau to, number one,
provide notice and an opportunity for public comment. Number two, it
says the CFPB must make any studies, data, or analysis used in writing
the bulletin public. Number three, it must consult with other relevant
regulators. Four, it must study the impact of the guidance on consumers
as well as women-owned businesses, minority-owned businesses, and small
businesses.
To those who claim this bill somehow undermines the CFPB'S
antidiscrimination efforts, let me quote from the views the Democrat
members stated in our report:
H.R. 1737 does not alter the CFPB's examination or
enforcement activity pursuant to ECOA. That is simply a red
herring.
Mr. Chairman, I urge all my colleagues to support H.R. 1737.
Mr. Chairman, I reserve the balance of my time.
Ms. MAXINE WATERS of California. Mr. Chairman, I yield myself 5
minutes.
Mr. Chairman and Members, I rise today in opposition to H.R. 1737,
which would impede the Consumer Financial Protection Bureau's important
work of regulating discriminatory auto lending practices and protecting
minority borrowers.
In spite of the fact that Chairman Hensarling just talked about a
study, what he didn't tell you is that was a study that was done by the
automobile industry, who is supporting this bill.
H.R. 1737 would cancel important policy guidance the CFPB provided to
lenders to help them comply with Federal fair lending laws.
The bill also imposes burdensome restrictions on the issuance of any
future auto lending guidance by requiring that the CFPB undergo a
public notice and comment period and conduct cost-benefit studies
before issuing guidance, requirements that have historically only been
applied to agency rulemakings.
These restrictions are clearly designed to substantially delay or
effectively prevent the Bureau from issuing future antidiscrimination
guidance to auto lenders, action that would undermine a lender's
ability to comply with the law at the expense of minority borrowers.
The long shadow of discrimination is still alive and well in some
corners of the auto lending marketplace.
The CFPB has secured nearly $140 million in relief to minority
borrowers since December 2013 in landmark settlements against Ally
Financial, Fifth Third Bank, and American Honda Finance Corporation,
finding in each case that undisclosed dealer markups caused minority
borrowers to overpay for their auto loans by an average of $200 over
the life of the loan compared to similarly situated White borrowers,
even when considering the borrower's creditworthiness.
Mike Jackson, the CEO of the Nation's largest auto retailer,
AutoNation, commended the CFPB's approach in its settlement with Honda,
noting that other lenders should take a close look at the Honda
settlement as a template for a solution.
Much like Mr. Jackson, I believe that the CFPB is doing a commendable
job of tackling a decades-old problem of minority borrowers not getting
a fair deal when they obtain financing from dealerships.
The Bureau's work in this regard should be supported, but instead, we
are faced with H.R. 1737, yet another legislative proposal that would
attempt to tie the Bureau's hands as it attempts to inform lenders of
the steps that they can take to comply with Federal fair lending laws
and to protect minority borrowers.
I wouldn't care if everybody were treated the same way--you charge
everybody too much--but, when you single out a certain segment of our
society that happens to be minorities and you charge them more than
other borrowers, it is a problem.
H.R. 1737 follows a familiar script of industry-driven attempts to
undermine the CFPB. Cost-benefit analysis, public notice and comment
periods, outside rulemakings, unnecessary interagency consultation
requirements are all designed to do the same thing, delay and undermine
the important work of the CFPB.
Instead of addressing the underlying discrimination in indirect auto
lending that the CFPB is seeking to address, H.R. 1737 takes away an
important tool for lenders seeking to follow the law who have been
relying on the guidance for almost 3 years to develop their compliance
policies.
This is not a modest proposal designed to bring about transparency in
the CFPB's oversight of auto lenders. Since issuing its guidance in
March 2013, the CFPB has been transparent.
It has provided industry with its models for identifying potential
fair lending violations. Its supervisory manual describes exactly what
the Bureau is seeking when conducting fair lending exams and
supervisory highlights that clearly set forth the kinds of business
practices that the Bureau will focus on when it examines an indirect
auto lender.
Furthermore, the CFPB's settlement agreements all follow a similar
template that give lenders a glimpse into the kind of remediation that
the Bureau will pursue should there be potential fair lending
violations within a lender's portfolio.
H.R. 1737's supporters have yet to identify what information any
additional transparency would yield or what additional information
lenders need to comply with Federal fair lending laws.
If enacted, H.R. 1737 would actually place lenders at a disadvantage,
just as scrutiny for fair lending violations from the CFPB and the DOJ
intensifies. We should be working to support efforts to give industry
as much information as possible so that they can comply with the law.
H.R. 1737 does just the opposite, creating unnecessary uncertainty for
lenders.
Mr. Chairman, I reserve the balance of my time.
Mr. HENSARLING. Mr. Chairman, I yield 5 minutes to the gentleman from
New Hampshire (Mr. Guinta), the author of H.R. 1737, a real champion
for due process and auto buyers.
Mr. GUINTA. I thank Chairman Hensarling for his leadership on this
very, very important issue.
Mr. Chairman, it has been over 2 years since the Consumer Financial
Protection Bureau issued flawed auto financing guidance that created
much uncertainty in the auto lending market.
More than half of car buyers finance their purchase when they acquire
an automobile. These consumers have the ability to receive great auto
rates through dealer-assisted financing.
However, this flawed and unstudied guidance threatens to eliminate
auto dealers' flexibility to discount the interest rates offered to
their consumers, the customers.
My good friend across the aisle, Mr. Perlmutter of Colorado, and I
have introduced H.R. 1737, along with 166 of our colleagues, both
Republican and Democrat, to give the CFPB a chance to fix this faulty
guidance. This bill was carefully written by Republicans and Democrats
very simply and narrowly to provide clarity, fairness, and, most
importantly, due process.
No Federal agency can set new policies through guidance. However, in
March of 2013, the CFPB attempted to go outside the formal rulemaking
process by blatantly disregarding consumers and small businesses,
blatantly disregarding their ability and their
[[Page H8299]]
right to comment on guidance that will directly affect them.
Mr. Chairman, H.R. 1737 asks that the CFPB rescind their flawed
guidance and reissue it under a more transparent process by consulting
other regulators and allowing the public notice and comment.
I want to be clear. This bill does not strip the CFPB of any
rulemaking authority it currently has. H.R. 1737 gives the CFPB the
golden opportunity to correct and reissue their guidance that would
take into account consumers and bring clarity to the market.
Mr. Chairman, again, I want to reiterate that my colleagues and I are
merely trying to promote transparency, accountability, and due process.
There are a small number of critics that believe this bill is
unnecessary because the CFPB already has the tools to correct their
auto guidance. Well, the CFPB could have fixed this issue without
legislation over 2 years ago, but they disregarded 13 bipartisan
letters that were sent urging them to correct the fallacies in their
guidance.
I find it ironic that the agency that is supposed to protect the
consumer is, in fact, harming them with this guidance. In fact, this
guidance impacts much more than car buyers. It harms auto dealers, RV
dealers, motorcycle dealers, international dealers, and even
manufacturers.
{time} 1400
Congress created the CFPB to protect consumers, not hurt them by
silencing the voices of thousands of consumers and small businesses.
On August 31 of this year, The Wall Street Journal reported: ``Some
automakers have responded by overhauling their loan pricing in ways
that will likely mean higher costs for some borrowers.''
If the CFPB really cares about developing policies that are truly in
the best interest of consumers, they should amend their guidance to be
more transparent and allow public participation.
Mr. Chairman, my bill is very simple and narrow, and, quite frankly,
it is common sense. It only asks for five things: public notice and
comment; make the data available to the public; consult with the
Federal Reserve Board, the FTC, and the DOJ; create a consumer impact
report; and conduct a study on women- and minority-owned businesses.
That is the crux of the bill.
Mr. Chairman, I include in the Record letters of support from the
National Automobile Dealers Association, the National Independent
Automobile Dealers Association, the Recreation Vehicle Industry
Association, American International Automobile Dealers Association, the
National Auto Auction Association, Alliance of Automobile
Manufacturers, the National RV Dealers Association, the Motorcycle
Industry Council, American Financial Services Association, New
Hampshire Automobile Dealers Association, and the Small Business and
Entrepreneurship Council, the U.S. Chamber, and the U.S. Consumer
Coalition.
I urge my colleagues to join the 166 Members in support of H.R. 1737.
Chamber of Commerce of the
United States of America,
November 17, 2015.
To the Members of the U.S. House of Representatives: The
U.S. Chamber of Commerce, the world's largest business
federation representing the interests of more than three
million businesses of all sizes, sectors, and regions, as
well as state and local chambers and industry associations,
and dedicated to promoting, protecting, and defending
America's free enterprise system, strongly supports H.R.
1737, the ``Reforming CFPB Indirect Auto Financing Guidance
Act,'' and H.R. 1210, the ``Portfolio Lending and Mortgage
Access Act.''
H.R. 1737 would change the Consumer Financial Protection
Bureau's (CFPB) approach to the indirect auto lending market,
and bring much-needed transparency. The CFPB has created
enormous uncertainty in this market by issuing guidance
without notice and comment, and undertaking enforcement and
supervisory actions based upon post hoc statistical models--
but has failed to share its analysis and assumptions, thus
depriving lenders of the ability to anticipate the CFPB's
analysis and to comply accordingly. H.R. 1737 would establish
clear rules and put any guidance regarding indirect auto
lending on a solid footing by eliminating any legal effect of
the CFPB's 2013 guidance, and then imposing reasonable
conditions on any future guidance on this topic.
The Chamber supports H.R. 1210, which would provide
regulatory certainty to lenders--particularly small lenders
such as community banks and credit unions--by allowing loans
held on the books of a lender to be eligible for the safe
harbor provided under the Qualified Mortgage (QM) rule. It
would also correct the CFPB's ``one-size-fits-all'' approach
for the mortgage market. H.R. 1210 would facilitate a robust
underwriting process by lenders and would also help qualified
borrowers obtain mortgages by alleviating some of the
uncertainty that currently exists under the QM rule.
Collectively, these bills would provide clear rules and
establish certainty in the marketplace benefiting consumers
and businesses. The Chamber urges the House of
Representatives to pass these bills as expeditiously as
possible.
Sincerely,
R. Bruce Josten,
Executive Vice President,
Government Affairs.
____
Small Business &
Entrepreneurship Council,
November 17, 2015.
To All Members of the U.S. House of Representatives: The
Small Business and Entrepreneurship Council (SBE Council)
strongly supports H.R. 1737, the ``Reforming CFPB Indirect
Auto Financing Guidance Act.'' We urge you to vote for this
bipartisan legislation when it is acted upon by the full
House this week.
This important piece of legislation rescinds the
problematic guidance issued by the Consumer Financial
Protection Bureau (CFPB) on indirect auto financing. The
guidance is based on assumptions and analysis the CFPB has
not made public. In the end, CFPB's action would prevent
consumers from negotiating and selecting a financing method
that makes the most sense for them. This guidance would also
raise costs. Small firms and self-employed individuals who
purchase vehicles to conduct businesses would be impacted by
this unnecessary auto-financing rule. To compete and survive,
small businesses need flexibility in choosing their best
financing arrangement.
H.R. 1737 requires that the CFPB be more transparent on
future rules or guidance by making those proposed actions
available for public review and comment. The CFPB would also
be required to study the impact of its actions on consumers.
Thank you for your consideration, and for your support of
America's entrepreneurs and small business owners.
Sincerely,
Karen Kerrigan,
President & CEO.
____
Motorcycle Industry Council,
Arlington, VA, November 17, 2015.
Hon. Frank Guinta,
House of Representatives, Cannon House Office Building,
Washington, DC.
Dear Representative Guinta: On behalf of the Motorcycle
Industry Council (MIC), I write in support of H.R. 1737, the
``Reforming CFPB Indirect Auto Financing Guidance Act.'' This
important legislation was voted out of Committee with
overwhelming support and currently has 166 cosponsors. We are
encouraged that this bipartisan legislative measure will be
considered by the full House of Representatives this week and
look forward to continuing to work with you as the bill moves
through the legislative process and ultimate enactment.
The MIC is a not-for-profit national industry association
with offices in Irvine, California and metropolitan
Washington, D.C. The MIC seeks to support motorcyclists by
representing manufacturers, distributors, dealers and
retailers of motorcycles, scooters, ATVs, ROVs, motorcycle/
ATV/ROV parts, accessories and related goods and services,
and members of allied trades such as insurance, finance and
others with a commercial interest in the industry.
H.R. 1737 is necessary as a result of 2013 Consumer
Financial Protection Bureau (CFPB) guidance that threatens
the ability of dealers to discount the annual percentage rate
offered to consumers to finance vehicle purchases. The
guidance was issued without adequate public input,
consultation with sister agencies or study of the impacts of
the guidance on consumers. Your legislation would address
these issues by requiring the CFPB to provide notice and a
period for public comment; make public any studies, data, and
analyses upon which the guidance is based; consult with the
Federal Reserve Board, the Federal Trade Commission and the
Department of Justice; and study the cost and impact of the
guidance on consumers as well as women-owned, minority-owned,
and small businesses.
Thank you.
Sincerely,
Duane Taylor,
Director, Federal Affairs.
____
November 18, 2015.
Dear Representative: We, the undersigned organizations who
represent businesses that make, sell, finance, auction and
service motor vehicles are writing to express our strong
support for H.R. 1737, the ``Reforming CFPB Indirect Auto
Financing Guidance Act.'' This bipartisan bill, introduced by
Reps. Guinta (R-NH) and Perlmutter (D-CO), would rescind the
Consumer Financial Protection Bureau's (CFPB) flawed 2013
auto finance guidance and allow the CFPB to reissue it under
a more transparent and better informed process.
H.R. 1737, drafted by members of the House Financial
Services Committee on a bipartisan basis, has 166 bipartisan
cosponsors. On
[[Page H8300]]
July 29, the House Financial Services Committee passed H.R.
1737 by a vote of 47-10. In addition to rescinding the 2013
guidance, H.R. 1737 would require that, prior to issuing any
new guidance related to indirect auto financing, the CFPB:
provide notice and a period for public comment;
make public any studies, data, and analyses upon which the
guidance is based;
consult with the Federal Reserve Board, the Federal Trade
Commission and the Department of Justice; and
study the cost and impact of the guidance on consumers as
well as women-owned, minority--owned, and small businesses.
This is the entire scope of the bill. By design, H.R. 1737
does not impinge on the CFPB's structure, jurisdiction, or
authorities.
H.R. 1737 is needed to produce a more informed guidance
compared to the 2013 guidance, which lacked public input,
transparency, consultation with the CFPB's sister agencies
and, by the CFPB's own admission, any study of the impact of
the guidance on consumers. As a consequence of being issued
without these essential safeguards, the CFPB's guidance could
potentially (1) eliminate a dealer's ability to discount
credit in the showroom; (2) raise credits costs; and (3) push
marginally creditworthy consumers out of the auto credit
market entirely.
Apart from the fact that guidance should not be used as a
means to make sweeping policy and market changes, the CFPB
auto guidance does not effectively manage fair credit risk in
the showroom, which is its purported goal. The Department of
Justice (DOJ), however, has created a better approach to
address fair credit risk without decreasing competition and
harming consumers. The DOJ model was used as a template for a
comprehensive compliance program that the National Automobile
Dealers Association, National Association of Minority
Automobile Dealers, and American International Automobile
Dealers Association issued last year to their respective
members. This compliance program addresses fair credit risk
where it matters--in the showroom--while preserving a
dealer's ability to discount credit.
Thirteen Congressional letters signed by over 90 Members
and Senators on both sides of the aisle have been written to
the CFPB asking questions and expressing concern regarding
its auto guidance. Nonetheless, many essential questions
still remain unanswered. The open and transparent process
required by H.R. 1737 would provide a framework for those
questions to be answered, and to ascertain whether the CFPB's
new policy can withstand public scrutiny.
Since the 1920s, credit has been the lifeblood of America's
auto industry. H.R. 1737 is a moderate, bipartisan process
bill that does not direct a result or tie the CFPB's hands,
but merely gives the public an opportunity to scrutinize and
comment on the CFPB's attempt to change the auto loan market
via ``guidance.''
We respectfully ask you to protect consumers and vote
``yes'' on H.R. 1737. Thank you for your consideration.
Sincerely,
Peter Welch,
President, National Automobile Dealers Association.
Chris Stinebert,
President and CEO, American Financial Services Association.
Steve Jordan,
CEO, National Independent Automobile Dealers Association.
Cody Lusk, AIADA,
President, American International Automobile Dealers
Association.
Mitch Bainwol,
President and CEO, Alliance of Automobile Manufacturers.
Phil Ingrassia,
President, The National RV Dealers Association.
Frank Hugelmeyer,
President, Recreation Vehicle Industry Association.
Frank Hackett,
CEO, National Auto Auction Association.
Tim Buche,
President and CEO, Motorcycle Industry Council.
____
United States Consumer Coalition.
Majority Leader McCarthy,
House of Representatives,
Washington, DC.
Majority Leader McCarthy: On behalf of the U.S. Consumer
Coalition, I write in support of H.R. 1737, the ``Reforming
CFPB Indirect Auto Financing Guidance Act.'' USCC thanks you
for scheduling a House vote on legislation that would rescind
flawed guidance from the Consumer Financial Protection Bureau
(CFPB) that was designed to eliminate the ability of
consumers to access auto financing discounts.
USCC would also like to thank Representative Guinta and
Chairman Hensarling for prioritizing the needs of American
consumers by introducing and shepherding this legislation
through Committee.
The U.S. Consumer Coalition (USCC) is a grassroots advocacy
organization that works to protect consumers' rights to
access free-market goods and services, and we believe that
all Americans benefit from a thriving free-market economy.
Unfortunately, the CFPB is actively engaging in efforts to
regulate, restrict, and diminish consumer choice. As an
advocate on behalf of America's consumers, defending their
right to make decisions for themselves and their families
without burdensome government interference, USCC supports
H.R. 1737.
H.R. 1737 would grant consumers continued access to auto
financing discounts that can save them millions of dollars
every year. To further protect the rights' of consumers, H.R.
1737 would also require more transparency in the CFPB's
regulation and rule making process. Specifically, the bill
would require the CFPB:
Provide a public notice and comment period before issuing
any final guidance on indirect auto financing;
Make publicly available all information relied on by the
CFPB for making such a rule;
Consult with other government agencies that share
jurisdiction over the indirect auto lending market; and
Study the costs and impacts of the guidance to consumers
and women-owned, minority-owned, and small businesses.
By the CFPB's own admission, the 2013 guidance was made
without any study on the impact that it would have on
consumers. It is imperative that such studies are done to
show the direct, and indirect, impacts that the powerful CFPB
can have on the every day lives of the American consumer.
USCC supports the reforms that H.R. 1737 seeks to make, as
well as any effort to protect consumers' freedom and choice.
Sincerely,
Brian Wise,
President, USCC.
____
New Hampshire Automobile
Dealers Association, Inc.,
Concord, NH, November 16, 2015.
Hon. Frank Guinta,
House of Representatives,
Washington, DC.
Dear Representative Guinta: On behalf of the 149 new car
and truck dealers in New Hampshire, we are writing to express
our strong support for H.R. 1737, the ``Reforming CFPB
Indirect Auto Financing Guidance Act.'' This bipartisan bill
was introduced on April 8 by you and Rep. Ed Perlmutter (D-
CO). H.R. 1737 would rescind the Consumer Financial
Protection Bureau's (CFPB) flawed 2013 auto finance guidance
and allow the CFPB to reissue it under an open and
transparent process.
In addition to rescinding the 2013 guidance, H.R. 1737
would require that, prior to issuing any new guidance related
to indirect auto financing, the CFPB:
provide notice and a period for public comment;
make public any studies, data, and analyses upon which the
guidance is based;
consult with the Federal Reserve Board, the Federal Trade
Commission and the Department of Justice; and
study the cost and impact of the guidance on consumers as
well as women-owned, minority-owned, and small businesses.
By design, H.R. 1737 does not impinge on the CFPB's
structure, jurisdiction, or authorities.
H.R. 1737 is needed to produce a more informed guidance
compared to the 2013 guidance, which lacked public input,
transparency, consultation with the CFPB's sister agencies
and, by the CFPB's own admission, any study of the impact of
the guidance on consumers. As a consequence of being issued
without these essential safeguards, the CFPB's guidance could
potentially (1) eliminate a dealer's ability to discount
credit in the showroom; (2) raise credits costs; and (3) push
marginally creditworthy consumers out of the auto credit
market entirely.
Apart from the fact that guidance should not be used as a
means to make sweeping policy and market changes, the CFPB
auto guidance does not effectively manage fair credit risk in
the showroom, which is its purported goal. The Department of
Justice (DOJ), however, has created a better approach to
address fair credit risk without decreasing competition and
harming consumers. The DOJ model is being used as a template
for a comprehensive compliance program that the National
Automobile Dealers Association, National Association of
Minority Automobile Dealers, and American International
Automobile Dealers Association issued last year to their
respective members. This optional compliance program
addresses fair credit risk where it matters--in the
showroom--while preserving a dealer's ability to discount
credit.
H.R. 1737 establishes an orderly, transparent process
whereby the CFPB can identify the DOJ model as a viable means
to address fair credit risk.
Since the 1920s, credit has been the lifeblood of America's
auto industry. H.R. 1737 is a moderate, bipartisan process
bill that does not direct a result or tie the CFPB's hands,
but merely gives the public an opportunity to scrutinize and
comment on the CFPB's attempt to change the auto loan market
via ``guidance.'' Without this legislation, dealer-assisted
financing remains at risk, along
[[Page H8301]]
with the threat that the CPFB's policy may eliminate our
customers' ability to obtain lower interest rates at
dealerships.
On behalf of all New Hampshire small business auto dealers,
thank you for your leadership on this important small
business and consumer issue.
Sincerely,
Dennis Gaudet,
New Hampshire Director, National Automobile Dealers
Association.
William Gurney,
Chairman, New Hampshire Automobile Dealers Association.
Ms. MAXINE WATERS of California. I yield 3 minutes to the gentleman
from Texas (Mr. Al Green), who is the ranking member on the Oversight
and Investigations Subcommittee.
Mr. AL GREEN of Texas. Mr. Chairman, I thank President Obama; I thank
Mr. Cordray, who is the head of the CFPB; and I thank the ranking
member for taking the position of protecting consumers.
Mr. Chairman, we live in a world where it is not enough for things to
be right. They must also look right. And here is what doesn't look
right and, in fact, is not right.
It doesn't look right and is not right for a person to go into an
auto dealership, agree on a price, and then be sent to a finance
department where this indirect lending takes place. It doesn't look
right for that person to then be quoted an interest rate and agree to
that interest rate, not knowing that the interest rate that the person
has agreed to is higher than the one the person qualified for.
This is what we are dealing with, consumers not knowing that they are
paying more for their interest rates than they have qualified for. We
dealt with this with the yield spread premium, same thing, slightly
different, in that it dealt with home mortgages, but we outlawed that
in Dodd-Frank. The CFPB is now trying its very best to make sure all
people are treated fairly and equally when they apply for auto loans.
It doesn't look right for this to happen, and studies consistently
show that minorities, African Americans, Hispanics, Asians, are charged
more for these loans than others are charged. The empirical evidence is
there for those who wish to see it.
It is not enough for things to be right; they must also look right.
This bill just doesn't look right, and it doesn't smell right, and it
is not right, and we ought not continue this kind of behavior in this
country.
In a righteous world, we would be debating the type of fraud that is
being perpetrated on consumers.
Mr. Chairman, I ask that people vote their conscience. But I will
tell you that I am not going to support this kind of procedure that
makes it entirely possible for invidious discrimination to continue. I
came here to fight invidious discrimination. This is a part of that
fight.
We must not allow this kind of behavior to continue when we have got
a CFPB that is willing to stand up for minorities, we have got a
President who has appointed this man, and we have got a ranking member
who is fighting hard to make sure minorities are treated fairly.
To this end, I would say, consumers have no greater friend in the
Congress of the United States of America than the Honorable Maxine
Waters, who goes to bat every day to make sure that consumers,
regardless of race, creed, color, national origin, or sexuality, are
treated fairly.
Mr. HENSARLING. Mr. Chairman, I yield 2 minutes to the gentleman from
New Jersey (Mr. Garrett), chairman of the Capital Markets and
Government Sponsored Enterprises Subcommittee of our committee.
Mr. GARRETT. Mr. Chairman, it was just back in 2013, the CFPB, the
Consumer Financial Protection Bureau, issued something called a
bulletin.
What did it do? It tried to eliminate auto dealer discounts,
essentially helping consumers, on the grounds that these discounts
create a fair credit risk.
Now, there are two major problems with what they did. First, the
CFPB's actions will actually raise costs, raise credit costs for
families--these very same families that are having a tough time, as it
is, in this economy because this is a bad economy right now--and make
it harder for these family to purchase a car.
Secondly, the CFPB's action is expressly prohibited by law from
regulating auto dealers by the authorizing statute in Dodd-Frank.
You see, the CFPB acted behind closed doors, without any transparency
or input from the general public that they are supposed to be
protecting, to circumvent, to go around the law, and found an indirect
way to alter an industry that the CFPB is prohibited by law from doing.
If that is not the very definition of an out-of-control agency, I
don't know what it is.
Mr. Chairman, it is time that we defend the rule of law in this
country and defend transparent government against these unaccountable
bureaucrats down the street at the CFPB.
That is why I am proud to sponsor the Reforming CFPB Indirect Auto
Financing Guidance Act. And by doing so, by repealing their improper,
unlawful actions and denying the ability to provide dealers discounts,
denying the ability to provide them the discounts to the customers, and
requiring a transparent process for all future actions, this bill will
preserve the consumers' ability to get a discounted auto rate and
preserve the ability to adhere to the principles of open, honest,
transparent, lawful government.
So I urge my colleagues from both sides of the aisle to support H.R.
1737.
Ms. MAXINE WATERS of California. Mr. Chairman, I yield myself such
time as I may consume.
We must realize that what Mr. Garrett just shared with us is
certainly not what the CFPB has done. As a matter of fact, what the
CFPB has done, it has said: Lender, you cannot say that I will take X
amount of percentage of interest; I will take 5, 10 percent interest;
and, dealer, you can mark it up another 3, 4, 5 percent.
So he has not exactly shared with you what happens with the CFPB.
I yield 3 minutes to the gentleman from Minnesota (Mr. Ellison), a
member of the Financial Services Committee.
Mr. ELLISON. I want to thank the gentlewoman for the time. The
ranking member has been an outstanding advocate for American consumers,
and I thank her.
I rise today to ask people to vote ``no'' on this piece of
legislation and to alert the American people of another attempt to make
it easier to overcharge you when you make a purchase.
Today's threat to Americans' wallets occurs when you try to buy a
car. Most people need to take out a loan to buy a car or a truck. They
frequently get their financing through an auto dealer.
Car buyers don't realize that some dealers can raise the price or the
interest rate offered by the partnering bank to make an additional
profit.
For years, there has been a concern that African Americans and
Latinos, despite negotiating harder and having good credit scores, pay
a higher interest rate than white car buyers, charging some people 2 or
2.5 more percent than others, based on skin color.
It is also a violation of the law. The Equal Credit Opportunity Act
prohibits discrimination in the financial marketplace. Lenders who
partner with auto dealers have a responsibility to ensure that
borrowers receive fair treatment. That is what the Consumer Financial
Protection Bureau is trying to do.
The CFPB issued guidance recommending that the auto industry
establish flat-rate pricing and some other approach to ensure that they
are not discriminating against their customers. This makes sense to me
and would be beneficial to consumers.
This bill, on which I urge a ``no,'' nullifies the CFPB's guidance.
It requires the bill to jump through a number of hoops that open the
Bureau up to litigation before the CFPB can establish new guidance.
The National Association of Minority Auto Dealers opposes this bill.
They say: ``To date, the recent consent orders between the CFPB, DOJ
and financial institutions and captive finance companies to settle
discrimination claims have not resulted in any negative outcomes or
loss of revenue for minority dealers. We are convinced that this matter
should and, more importantly, can be resolved with a nonlegislative
fix.''
Mr. Chairman, I say thank you to them.
When people are overcharged or treated unfairly in the marketplace,
it
[[Page H8302]]
harms their ability to build wealth and fully participate in this
economy. If you want to do something about income inequality, you must
say ``no'' to this bill.
Join the National Association of Minority Auto Dealers, the National
Association for the Advancement of Colored People, the Center for
Responsible Lending, the Consumers Union, Consumer Action, the National
Council of La Raza, Americans for Financial Reform, American
Association for Justice, ColorOfChange, Leadership Conference on Civil
Rights and Human Rights, the Urban League, and more to vote ``no'' on
this legislation.
I include in the Record the National Association of Minority
Automobile Dealers' letter opposing this legislation and the NAACP's
letter opposing this legislation.
I just want to point out that discrimination in this country has been
fought long and hard for centuries. Let's not stop now.
National Association of
Minority Automobile Dealers,
Largo, MD, November 13, 2015.
Hon. G.K. Butterfield,
RHOB,
Washington, DC.
Dear Congressman Butterfield: The National Association of
Minority Automobile Dealers (NAMAD) is not in support of H.R.
1737, ``Reforming CFPB Indirect Auto Financing Guidance
Act'', as we believe this issue can and should be resolved
non-legislatively. This legislation does nothing to alter the
Consumer Financial Protection Bureau's (CFPB) authority to
enforce, or lenders' obligations under the Equal Credit
Opportunity Act (Act).
We support the CFPB's mission to ensure that consumers are
protected and treated fairly. Reversing guidance to lenders
at a time of heightened regulatory scrutiny could delay
lenders' efforts to comply with the Act.
Looking back on the great financial crisis of 2008,
legislation enacted to bail out financial institutions and to
aid General Motors and Chrysler through bankruptcy was not
beneficial for minority dealers. Minority-owned dealers were
disproportionally affected with a 40% (400 dealers) decline
in its dealer body in comparison to non-minority dealers, who
suffered only a 6% decline. Today, out of the 18,000 new
automobile dealerships, only 1,100 are minority owned.
NAMAD finds that, to date, the recent consent orders
between the CFPB, DOJ and financial institutions and captive
finance companies to settle discrimination claims have not
resulted in any negative outcomes or loss of revenue for
minority dealers.
We are convinced that this matter should, and more
importantly, can be resolved with a non-legislative fix. In
particular, NAMAD believes that the Fair Credit Compliance
Policy & Program it instituted in 2014 along with NADA and
AIADA achieves this goal, as the program is designed to
prevent any discriminatory practices for all consumers.
We do not support H.R. 1737, as the solution to
discrimination in auto lending, but rather urge you and your
colleagues to assist us in coming up with and implementing a
non-legislative answer.
Sincerely,
Damon Lester,
President.
____
November 18, 2015.
Re NAACP Strong Opposition to H.R. 1737, The Reforming CFPB
Indirect Auto Financing Guidance Act.
Members,
U.S. House of Representatives, Washington, DC.
Dear Representative Ellison, On behalf of the NAACP, our
nation's oldest, largest and most widely-recognized
grassroots-based civil rights organization, I strongly urge
you to oppose and vote against H.R. 1737, the Reforming CFPB
Indirect Auto Financing Guidance Act. If enacted, this
legislation will allow racial and ethnic minorities to
continue to be discriminated against by auto lenders.
Discrimination based on race or ethnicity in the financial
services or any other arena must be stopped, and this bill
goes in the opposite, and wrong, direction.
Financial regulators have known for more than 20 years that
the full price you may pay for an auto may not be based
solely on the make, type, and model of the car; some of the
less scrupulous car dealers would offer higher loan rates to
people based on the color of their skin, their last name, or
what they look like. In the mid-1990's, this trend of
discrimination became apparent and a series of lawsuits were
filed against the largest auto finance companies in the
country. The data from those lawsuits showed that borrowers
of color were twice as likely to have their loans marked up,
and paid markups twice as large as similarly situated white
borrowers with similar credit ratings. Thus, on March 21,
2013, the Consumer Financial Protection Bureau (CFPB) issued
a bulletin providing guidance for indirect auto lenders who
may fall within the CFPB's jurisdiction on ways to limit fair
lending risk under the Equal Credit Opportunity Act, or ECOA.
This CFPB bulletin explained that certain lenders who offer
auto loans through dealerships are responsible for any
unlawful, discriminatory pricing, which may occur and that
they should take actions to eliminate the discrimination. In
other words, dealers could continue to mark up loans, and
they could continue to be compensated for such mark-ups;
simply, they should not discriminatorily mark-up loans based
on race. And the financial servicers which underwrote the
loans should do what they could to ensure that discrimination
based on race or against any other protected class was not
perpetuated.
The NAACP commends the CFPB on this guidance on indirect
auto lending. It is an important step in the Bureau's
enforcement of fair lending laws and regulations, and it is
clearly within the jurisdiction of the CFPB to ensure that
there is not discrimination in lending.
The CFPB has authority to examine large banks, and credit
unions--and their affiliates--that have assets over $10
billion. The CFPB supervises more than 150 of the nation's
largest financial institutions. Furthermore, existing law,
ECOA, makes it illegal for a creditor to discriminate in any
aspect of a credit transaction on prohibited bases including
race, color, religion, national origin, sex, marital status,
and age. Under ECOA, and not to mention under the rules of
basic fairness and a moral sense of right and wrong, lenders
have an obligation to monitor and eradicate discrimination,
and to change those practices that lead to the
discrimination. In its bulletin, the CFPB reiterated that
certain lenders which may offer auto loans through
dealerships are liable for unlawful, discriminatory pricing.
Racial and ethnic minorities have long been victims of high
priced, often-unsustainable, predatory, loans. This is true
when we are discussing almost every financial transaction:
whether it be a mortgage, an auto loan, or a short-term loan
just to make ends meet, including a payday loan. These high
cost, predatory, loans have been a staple in our community
for decades. Study after study has clearly demonstrated that
even when credit history is taken into account, African
Americans and Latinos are regularly charged more for home or
auto loans than white customers. While dealer markups affect
all consumers, research has shown that Latino and African
American borrowers are more likely than White borrowers to
receive an unnecessary markup in their interest rate, and the
markup is typically higher for Latinos and African Americans
than Whites, regardless of creditworthiness.
H.R. 1737, the Reforming CFPB Indirect Auto Financing
Guidance Act'' would undermine the ability of the CFPB to
root out discrimination, something that has no place in our
lending markets, yet has, unfortunately, been proven to
exist. The role of the CFPB is to protect consumers, and with
their 2013 guidance, they have done just that. We should be
applauding and encouraging the agency's measured, yet
affirmative, steps to stop discrimination. Yet H.R. 1737
attacks the Bureau's attempts to protect us.
Auto dealers and auto dealer financing agencies who play by
the rules and do not discriminate should have no problems
with the CFPB guidance. In fact, they should welcome it as it
helps clean up an industry which has been tainted by
discrimination for too long. An auto is too prevalent, too
necessary, and too much of a family investment for us to
allow discrimination to exist in the cost of the car.
Thank you in advance for your attention to the NAACP
position. Should you have any questions or comments on the
NAACP position, please feel free to contact me.
Sincerely,
Hilary O. Shelton,
Director, NAACP Washington Bureau & Senior Vice President
for Policy and Advocacy.
____
Prevent Discrimination in Auto Lending
Oppose H.R. 1737: the Reforming CFPB Indirect Auto Financing Guidance
Act
H.R. 1737 is opposed by the National Association of Minority
Auto Dealers, Center for Responsible Lending, NAACP,
Consumers Union, Consumer Action, National Council of La
Raza, Americans for Financial Reform, American
Association for Justice (AAJ), Color of Change,
Leadership Conference on Civil and Human Rights, National
Consumer Law Center, National Urban League, U.S. PIRG,
the Woodstock Institute and more.
Dear Colleague: We urge you to oppose H.R. 1737, the so-
called ``Reforming CFPB Indirect Auto Financing Guidance
Act.'' This legislation would prevent the Consumer Financial
Protection Bureau (CFPB) from enforcing laws against
discrimination in auto lending. This bill nullifies CFPB's
guidance to lenders on how to avoid practices that may lead
to discriminatory pricing.
Automobiles are the most common financial assets owned by
American households, and are a prerequisite for many jobs.
When people buy cars with dealer financing, they can be
charged an interest rate mark up. This mark up can be set by
the individual car dealer. Such variable pricing can lead to
discrimination. Even though current U.S. law prohibits
lending discrimination based on unrelated background traits,
African Americans, Latinos and others could be charged a
higher interest rate, regardless of credit scores or income.
In recent years, the CFPB and the Department of Justice
took actions resulting in
[[Page H8303]]
more than $176 million in fines and restitution to people who
paid higher interest rates for auto loans based not on their
credit risk but on their ethnicity.
There is no reason why the CFPB should not be able to
continue to enforce these rules for indirect auto lenders.
When people are overcharged, they have less money to spend
and invest which slows our economy. We urge members to
support, not weaken, the CFPB's effort to fight
discrimination in auto lending. Oppose H.R. 1737.
Sincerely,
Keith Ellison,
Co-Chair, Congressional Progressive Caucus.
Raul Grijalva,
Co-Chair, Congressional Progressive Caucus.
____
Support Fair Lending, Oppose H.R. 1737
Stand with Nearly 70 Civil Rights and Consumer Advocacy Organizations
in Opposition to H.R. 1737
Dear Colleague: This week, the House will consider H.R.
1737, the ``Reforming CFPB Indirect Auto Lending Guidance
Act.'' This legislation sends a clear message to the CFPB
that they should back down from enforcing our fair lending
laws against auto lenders. The CFPB has recovered $140
million in fines and penalties against auto lenders for
engaging in discriminatory auto lending practices in two
years--more than other regulators in the 40 years since the
Equal Credit Opportunity Act (ECOA) was enacted. Now is not
the time to tell the Bureau to back away from their mission
in ensuring lending free from discrimination on the basis of
race, ethnicity or other protected characteristics or to
introduce unnecessary uncertainty to ongoing lender efforts
to comply with fair lending laws.
Over the course of several investigations, the CFPB has
found that auto lenders have failed to appropriately monitor
practices that allow African-American, Hispanic, and Asian
and Pacific Islander borrowers to be charged more than their
white counterparts through undisclosed interest-rate markups.
These additional markups are charged without regard to the
borrower's credit history and have displayed a clear pattern
of discrimination. Several large auto financers have already
settled with the CFPB and pledged to reform their practices,
while at least seven additional investigations are still
ongoing.
Dealers should be fairly compensated for their work, but it
should not be at minority borrowers' expense. Fair
compensation for dealers can co-exist with affordable and
equitable access to credit, and the CFPB's approach to date
reflects this recognition. Even the CEO of the largest auto
retailer in the country, AutoNation's Mike Jackson, has
commended the CFPB's approach stating that ``[t]he goal [of
the Honda Settlement] is to reduce the variability in loans
without hurting the dealer economically . . . [t]h[e] [Honda
agreement] is a very viable method of doing both of those
things, and I'm saying the industry should look at this as a
template for moving forward.''
The CFPB is tackling decades of discrimination in the auto
lending marketplace, and they have done it in spite of
various attempts to undermine their authority to do so
directly through familiar attacks on the Bureau's structure
and funding and indirectly through proposals like H.R. 1737.
This legislation would tie the Bureau's hands at the very
time that they are making progress in reining in decades-old
practices that have left far too many borrowers overpaying
for their auto loans.
Supporters of H.R. 1737 contend that the proposal is modest
because it is not a direct attack on the Bureau's structure,
budget or enforcement authority under ECOA. This is
misleading, as it undermines lenders' attempts to comply with
ECOA. Lenders have used the guidance H.R. 1737 nullifies for
nearly three years to develop compliance policies designed to
protect consumers. As the Administration notes in their
opposition to H.R. 1737, ``[t]he bill would create confusion
about the existing protections in place to prevent
discriminatory auto loan pricing, and effectively block [the]
CFPB from issuing related guidance in the near-term.''
Further, while H.R. 1737 does not expressly prohibit the
reissuance of future guidance, the restrictions it places on
the Bureau concerning any future guidance ensures that it
will be substantially delayed or never reissued. No other
agency is required to undergo requirements similar to a
rulemaking for simply issuing guidance to regulated entities,
and no other type of guidance from the CFPB is subject to
these burdensome restrictions except guidance to auto
lenders. Indeed, H.R. 1737's supporters have yet to
demonstrate why guidance to auto lenders requires that the
Bureau jump through so many bureaucratic hoops when the
guidance is there to help lenders comply with the law.
Contrary to H.R. 1737's supporters' claims that the
proposal is necessary to maintain affordable auto financing,
the CFPB's oversight of potentially discriminatory lending
practices has not led to higher borrower costs or restricted
access to credit. Outstanding auto loan balances reached $1
trillion dollars in the second quarter of 2015--the first
time in U.S. history. Industry experts predict that the
number of vehicles sold in 2015 will exceed 17 million for
the first time since 2001. The National Association of
Minority Auto Dealers have confirmed this, noting in their
opposition to H.R. 1737 that the CFPB's activity, ``ha[s] not
resulted in any negative outcomes or loss of revenue'' for
their member dealers. There is simply no evidence that the
Bureau's oversight has caused prices to increase or led to
fewer borrowers being able to get financing.
Make no mistake, H.R. 1737 leaves consumers more vulnerable
to unfair or discriminatory business practices. This is why
the Administration, the nation's minority auto dealers, the
largest auto dealer in the country, and nearly 70 civil
rights organizations and consumer advocacy groups oppose H.R.
1737--it does nothing to move the ball forward on the
important work of eliminating potentially discriminatory
lending practices.
The people best positioned to address discriminatory
lending practices are the lenders themselves, and H.R. 1737
denies lenders vital information they need to ensure that
they are not underwriting loans that contain potentially
discriminatory interest rate markups that harm borrowers.
For the foregoing reasons I would urge a NO vote on H.R.
1737.
Respectfully,
Maxine Waters.
Mr. HENSARLING. Mr. Chairman, I yield myself 10 seconds just to say
that the exact same group the gentleman quoted, the National
Association of Minority Auto Dealers, says in their letter: ``This
legislation does nothing to alter the Consumer Financial Protection
Bureau's authority to enforce, or lenders' obligations under the Equal
Credit Opportunity Act.''
Again, that is a red herring.
I yield 1\1/2\ minutes to the gentleman from Indiana (Mr. Messer).
Mr. MESSER. Mr. Chairman, if it ain't broke, don't fix it.
Ignoring this simple wisdom, the CFPB issued a guidance bulletin,
without public notice and comment, threatening to eliminate a car
dealer's ability to discount interest rates for their customers.
This so-called guidance was offered with no study of the impact on
consumers or small businesses, and it was issued with no proof that
current industry standard discount practices were harming consumers.
Let me repeat. Despite the rhetoric, the guidance was issued with no
evidence of any discrimination.
This much is clear: the regulatory burden imposed by this guidance
will be bad for car dealers because it eliminates a car dealer's
ability to provide lower interest rates for their customers, and it is
bad for consumers because they will inevitably pay more.
H.R. 1737 is commonsense legislation that stops the CFPB's solution
in search of a problem. It nullifies the CFPB's current guidance
bulletin restricting discounts on auto loan interest rates, and it
requires the CFPB to allow for public notice and comment before any
further restrictions can be imposed.
It also requires a study of the costs and impacts of interest rate
deductions on consumers.
It is a good bill, and I urge my colleagues to support it.
Ms. MAXINE WATERS of California. Mr. Chairman and Members, this
business about consumers not being able to negotiate down, that somehow
the car dealers can't give a discount is absolutely not true,
absolutely not true.
I yield 2 minutes to the gentlewoman from Wisconsin (Ms. Moore), the
ranking member on the Subcommittee on Monetary Policy and Trade of the
Financial Services Committee.
Ms. MOORE. I thank the ranking member.
Mr. Chairman, I do rise to oppose H.R. 1737. I have listened very
carefully to my colleagues, and I am very sympathetic and empathetic to
their desire to help their auto dealers. Too bad this legislation
doesn't do that.
I also agree with the proponents of this bill that the CFPB can't
directly regulate auto dealers, and I don't think the CFPB wants to
regulate auto dealers.
{time} 1415
The problem with this bill is that it doesn't help auto dealers, and
it is not a response to CFPB regulatory overreach. What the CFPB does
have jurisdiction over is the Equal Credit Opportunity Act.
A few years ago, the Bureau noticed a funny thing: that minorities
were paying higher markups on auto loans, even when you control for
credit risk and other factors, discounts. They noticed if you were
Jesus Rodriguez or Barack Obama Jones that somehow you paid a higher
price for the car.
[[Page H8304]]
Now, the problem is that this legislation attempts to free the auto
dealers from discrimination. Of course, discrimination is a violation
of the Equal Credit Opportunity Act. The CFPB and the Department of
Justice brought actions against these lenders for violations of ECOA.
We heard from the other side that there was no evidence that these
car dealers had done anything wrong. No, because it didn't go to court.
That is why there was no evidence. It went to settlement, and they
settled for $140 million.
Pretty simple, the CFPB protected borrowers from discrimination and
then put out helpful guidance.
So why are we here today, Mr. Chairman? We are here considering this
legislation so that auto dealers can violate the ECOA.
Mr. HENSARLING. Mr. Chairman, I yield 3 minutes to the gentleman from
Indiana (Mr. Stutzman).
Mr. STUTZMAN. Mr. Chairman, I thank the chairman for his yielding and
his work on this issue. I also thank Mr. Guinta for bringing this bill
forward.
Mr. Chairman, ever since the CFPB introduced its 2013 bulletin on
indirect auto lending, the need for this legislation has been clear.
First, the CFPB issued its bulletin in order to get around the
rulemaking process for indirect auto lending. This kind of guidance is
traditionally used as a mere restatement of law or to provide further
explanation of rulemaking. It is not traditionally used to make a major
policy like fundamentally altering the auto loan market.
Second, it is clear that the CFPB is unwilling to publish online all
of the data and assumptions it has relied upon for this guidance.
Providing these details should be an obvious and easy step to implement
for any credible government agency.
Unfortunately, because the CFPB is not subject to the appropriations
process, they seem unwilling to comply with even the most commonsense
oversight by Congress. Therefore, H.R. 1737 is necessary to require the
CFPB to provide for a notice and comment period before it can reissue
any related guidance.
Mr. Chairman, this compromise legislation represents fair and
reasonable adjustments to the CFPB's regulatory guidance process
intended to promote transparency and accountability for regulators.
This legislation is truly a bipartisan effort that was supported in
committee by 13 Members on the minority side of the aisle.
I am also glad to see widespread support for this legislation from a
range of groups, including the U.S. Chamber of Commerce, the National
Automobile Dealers Association, the national RV Dealers Association,
the Independent Community Bankers Association, and the Credit Union
National Association.
Mr. Chairman, last year I was proud to introduce legislation similar
to Mr. Guinta's after hearing from so many auto dealers in my State the
frustrations they had with this particular rule. I am proud to support
this legislation, and I urge my colleagues on both sides of the aisle
to help us promote greater transparency and accountability and bring
common sense back to the marketplace.
Again, I thank the gentleman from New Hampshire (Mr. Guinta).
Ms. MAXINE WATERS of California. Mr. Chairman, what Mr. Stutzman is
doing is trying to confuse people between a rule and a guidance. This
is a guidance, and they are trying, through this legislation, to make
guidance comply with the same kind of rules that the rules have to go
through. So don't pay any attention to that. He is just trying to
confuse people.
Mr. Chairman, I yield 2 minutes to the gentlewoman from New York (Ms.
Velazquez), a member of the Financial Services Committee.
Ms. VELAZQUEZ. Mr. Chairman, I rise in strong opposition to H.R.
1737.
Mr. Chairman, this legislation is yet another attempt to obstruct the
most important watchdog working on behalf of U.S. consumers, the CFPB.
Since its creation, the agency has returned over $11 billion to more
than 25 million consumers harmed by unfair and deceptive practices. Its
work is absolutely essential for everyday Americans, giving them the
security of knowing that there is someone on their side.
One area where the CFPB's role is increasingly important is auto
finance, where outstanding car and truck loan balances now reach $1
trillion, the highest in history.
Unfortunately, discrimination is still alive and well in the indirect
auto lending marketplace. In the three settlements to date against Ally
Financial, Fifth Third Bank, and Honda, the CFPB secured nearly $140
million in borrower relief and penalties. It found that minority
borrowers paid $200 more over the life of a car loan than White
borrowers, even when controlling for borrowers' creditworthiness.
The CFPB's findings are consistent with decades of litigation and
research that confirm that discretionary markups in indirect auto
lending cause millions of dollars in overpayments from minority
borrowers. To further their work in this area, the CFPB issued specific
guidance regarding auto lending practices.
Unfortunately, H.R. 1737 will repeal this guidance and place absurd
restrictions on the reissuance of any new guidance. These new
restrictions would be unique to the CFPB and would place an
unprecedented burden on the agency's issuance of guidance designed to
help lenders comply with Federal fair lending laws. This undermines the
basic role of the CFPB and will create uncertainty regarding the
application of Federal lending laws in the auto finance sector.
The Acting CHAIR (Mr. Smith of Nebraska). The time of the gentlewoman
has expired.
Ms. MAXINE WATERS of California. Mr. Chairman, I yield the
gentlewoman from New York an additional 30 seconds.
Ms. VELAZQUEZ. Doing so is a raw deal for car buyers, especially
minorities, who continue to fall victim to deceptive and unfair
practices.
Let's let the CFPB do what it is supposed to do--protect the millions
of consumers that will buy cars this year--and reject H.R. 1737. I urge
a ``no'' vote on this misguided legislation.
Mr. HENSARLING. Mr. Chairman, might I inquire how much time is
remaining on each side.
The Acting CHAIR. The gentleman from Texas has 15 minutes remaining.
The gentlewoman from California has 13\1/2\ minutes remaining.
Mr. HENSARLING. Mr. Chairman, I yield 3 minutes to the gentleman from
Texas (Mr. Hinojosa), my Democratic colleague.
Mr. HINOJOSA. Mr. Chairman, I rise today in support of H.R. 1737, the
Reforming CFPB Indirect Auto Financing Guidance Act.
I am proud to say that in my 19 years in Congress, I have been a
champion of the consumer and have fought for their protection. As a
member of the Financial Services Committee, I strongly supported the
creation of the Consumer Financial Protection Bureau and continue to be
a strident defender and proponent of CFPB.
I support this bill to correct the CFPB's guidance with respect to
indirect auto lending, which would increase the cost of consumer
financing. In our effort to find discrimination in the marketplace, we
must be careful not to push for policy solutions that hurt the very
consumers we are trying to protect.
This bill does not prevent nor hinder the CFPB or any agency from
enforcing fair lending laws. Rather, it provides an opportunity to
reissue the guidance in a more inclusive and transparent manner.
As part of our mission to protect consumers, I urge the CFPB to work
closely with stakeholders to improve the guidance in this important
area. I also encourage the Bureau to develop and implement a financial
literacy program aimed at teaching consumers the skills necessary to
make informed financial decisions regarding the purchase of an auto
through the use of financing. We need to do everything we can to ensure
Americans have the basic financial literacy skills to enable them to
navigate our increasingly complex financial system and make good,
informed decisions.
Mr. GUINTA. Will the gentleman from Texas yield?
Mr. HINOJOSA. I yield to the gentleman from New Hampshire so that he
may express support for financial literacy and offer to work with us to
encourage the Bureau to develop a financial literacy program aimed at
auto financing.
[[Page H8305]]
Mr. GUINTA. I would like to reiterate that the CFPB has the authority
and the tools to increase financial literacy skills to consumers. I
would be more than happy to work with the gentleman personally to make
sure that they better educate consumers when they are purchasing a car.
That is something that is important and critical. I value the interest
that the gentleman has on this component of the bill, and I plan to
work with the gentleman.
Mr. HINOJOSA. I thank the gentleman. I gladly accept his offer, and I
look forward to working together to promote financial literacy,
especially with respect to auto financing.
Mr. Chairman, I urge my colleagues to support H.R. 1737.
Ms. MAXINE WATERS of California. Mr. Chairman and Members, this is
not about financial literacy. This is about raw discrimination.
I yield 2 minutes to the gentleman from Maryland (Mr. Cummings), the
ranking member of the Oversight and Government Reform Committee. He is
a real fighter for freedom and justice.
Mr. CUMMINGS. Mr. Chairman, I thank the gentlewoman for yielding, and
I thank the gentlewoman for her strong leadership.
Mr. Chairman, I rise today to oppose H.R. 1737. If this bill is
enacted, it will cost minority auto purchasers millions of dollars.
Car purchases are extremely complicated transactions. Most Americans
make only a few in a lifetime, and they are not familiar with the many
detailed terms and procedures of these transactions. One thing that is
not complicated is that charging a markup just because a buyer is a
minority is simply illegal.
The Consumer Financial Protection Bureau protects minority purchasers
against auto dealers that seek to charge abusive and predatory markups.
The purpose of the bill before us today is to eliminate this
protection--that is exactly what it is--leaving minority consumers at
risk of being charged abusive and predatory interest rates.
In 2013, the CFPB ordered Ally Bank to pay $80 million in damages and
$18 million in penalties for imposing higher interest rates on 235,000
minority borrowers. Just this year, the Bureau ordered Fifth Third Bank
to pay $18 million in damages for permitting markups of as much as 2.5
percent for minorities.
Because this bill would prevent the CFPB from carrying out its duty
to protect minority borrowers, the administration has announced they
would veto this bill.
This House should reject H.R. 1737 and every repeated effort to
undermine--and that is exactly what it is, to undermine--the CFPB.
Mr. HENSARLING. Mr. Chairman, I yield 3 minutes to the gentleman from
Georgia (Mr. David Scott), my Democratic colleague.
Mr. DAVID SCOTT of Georgia. Mr. Chairman, ladies and gentlemen, I
want to take a moment to point out why I am supporting this and am a
cosponsor of this bill.
First of all, to our leader, the ranking member who does an excellent
job, she is absolutely right. We must go at discrimination with
lenders. But, Mr. Chairman, the unintended consequence of this is not
punishing the lenders who may or may not be doing discrimination. If we
show it, they should. Unfortunately, this guidance goes directly at
dealers and low- and moderate-income customers, African Americans and
other minorities who will be denied, because it takes away the dealers'
ability to discount interest rates and be flexible.
Now, Mr. Chairman, there are 55 million unbanked and underbanked
people in the United States. They don't have the bank. They are not
going to Ally Bank.
{time} 1430
But when they want, they have to buy a car. Some of them don't even
have a credit card, but they have that dealer that can walk through the
door. And if that dealer has the flexibility to be able to discount the
interest rate, bringing a lower price to the car, they shouldn't be
denied from having that opportunity to do it.
Now, let me go to the racial issue. When you play the race card, you
have got to make sure you play it right. That is all I am saying.
When we looked at the CFPB and we looked at the methodology that they
used to determine who the Black people were, they said: Hey, the best
way of doing this is to go by the last names: Jackson, Williams,
Johnson, Robinson.
Yeah. A lot of Black people are named that, but there are an awful
lot of White people that are named that, too.
So is there any wonder, when the checks went out, that there were
some happy White people, looking: Where did I get this money? Where did
I get this $200 or $300 from?
Now, ladies and gentlemen, I take a backseat to nobody when it comes
to standing up and fighting for racial equality. My life's story is
that. I integrated the school systems in Scarsdale, New York, where not
only was I just the only Black kid in the school or in my class, but I
was the only Black kid in the whole city of Scarsdale.
My office mate in the Senate was Julian Bond. We went all across this
country speaking for 40 years as a State representative, as a State
senator, and now as a Congressman. My whole life has been for fighting
this.
But when you deal with racial discrimination, it has got to be right.
The methodology that the CFPB used is flawed. It is absolutely flawed.
In the process, the CFPB itself is being charged with racial
discrimination.
Now, all I am saying is what is fair is fair.
The Acting CHAIR. The time of the gentleman has expired.
Mr. HENSARLING. I yield the gentleman from Georgia an additional 1
minute.
Mr. DAVID SCOTT of Georgia. We are not asking to discontinue this. We
are asking to go after where the discrimination is. But don't hurt the
lower middle-income people who don't have the credit or don't have a
credit card.
They have to go in there and work with that dealer. If you take that
out of the way of the dealer, you are hurting the very people that some
of the people who are opposing our bill want to help.
So, Mr. Chairman, let's get clarity here. Let's get truth here. All
we are doing is asking the CFPB to come back, start over, get the right
methodology, so you are getting the right people that you are sending
the checks to, and also call in the Justice Department, the Federal
Trade Commission, and the Federal Reserve, who are the ones under Dodd-
Frank that regulate the auto dealers and not auto lenders.
Ms. MAXINE WATERS of California. Mr. Chairman, I yield myself such
time as I may consume.
Mr. Chairman and Members, all of the arguments that are used by the
other side simply are not true.
They claim that the CFPB does not have the authority. They do have
the authority under the Equal Credit Opportunity Act.
They claim that they didn't use the right methodologies, the same
that is used by the Justice Department.
They claim that the dealers can't give discounts. That is absolutely
not true. They can.
I yield as much time as he may consume to the gentleman from New York
(Mr. Jeffries), a young man that has been leading an effort on the
floor of Congress for justice for minorities and women consistently.
Mr. JEFFRIES. Mr. Chairman, I thank the distinguished gentlewoman
from California for yielding and for her leadership.
Let's be clear. The opponents of this legislation are not playing the
race card. America for centuries has played the race card--slavery, Jim
Crow, lynchings, the Black Codes, institutional racism, unconscious
bias--that continues to this day.
Yes. Of course we have come a long way in the United States of
America, but we still have a long way to go. Everyone should have
recognized the fact a few months ago when those souls were killed in
Charleston, South Carolina, that racism in many corridors in this
country is still functional, in existence, and poisoning our society.
So when we take a situation where African American consumers are
paying higher interest rates for the same financial product when
controlling for creditworthiness put in the context of history in this
country, we are concerned.
All we are simply saying is that, if we really believe in a country
where
[[Page H8306]]
everyone, regardless of color, has the opportunity to robustly pursue
the American Dream, we need a level playing field. We need rules of
engagement that apply to everyone, regardless of the color of their
skin. We need equal opportunity.
That doesn't exist right now in the automobile lending context. That
is why I urge a ``no'' vote against this legislation. Let the CFPB do
its work.
Mr. HENSARLING. Mr. Chairman, I yield 3 minutes to the gentleman from
Texas (Mr. Williams), one of the outstanding workers for H.R. 1737.
Mr. WILLIAMS. Mr. Chairman, in full disclosure, my name is Williams,
as Mr. David Scott had said. I am also an auto dealer, but my
colleagues here in the House already know that. It is not something I
am ashamed of. In fact, it is something I am very proud of.
But Mr. Guinta's bill isn't just about auto dealers. It is about an
agency that continues to act not in the best interest of the consumer,
but bigger government.
Well, Mr. Chairman, I am here this afternoon to give you a little
perspective on that. As many small-business owners can tell you, the
financial crisis of 2008 was the worst they had ever seen. Millions of
Americans and thousands of small-business owners never recovered.
In response, Congress passed the Dodd-Frank Act, which, in turn,
created the CFPB. The CFPB was given broad jurisdiction over the
financial services sector: banks, insurance companies, mortgage
lenders, credit card companies, payday lenders. The list goes on and on
and on.
Dodd-Frank consisted of 2,300 pages of new laws and regulations. Mr.
Chairman, I want to take a second and read from one of the sections of
Dodd-Frank that has particular importance to us today. Section 1029
says:
The Bureau may not exercise any rulemaking, supervisory enforcement
or any authority, including any authority to order assessment, over a
motor vehicle dealer that is predominantly engaged in the sale and
servicing of motor vehicles, the leasing and servicing of motor
vehicles, or both.
So how did we get here today? In 2013, the CFPB didn't propose a new
rule or a new regulation. In fact, they didn't seek comments from
industry, consumers, or even Congress. But, instead, they offered
guidance.
Since releasing this guidance in 2013, the CFPB has acknowledged that
they did not analyze or estimate the economic impact it would have on
customers. In addition, an independent study commissioned by the
American Financial Services Association found several significant flaws
in the Bureau's methodology, which led to inaccurate, incomplete, and
unreliable conclusions about pricing disparities in the auto finance
market.
In addition, recent settlements from the CFPB and lenders have
highlighted the Bureau's strong-arm tactics and inability to prevent
fraudulent claims. At a hearing a few months ago, the Committee on
Financial Services heard testimony about the lack of oversight
implemented by the CFPB when paying claims to those who were
potentially discriminated against.
Mr. Chairman, what most don't understand is that auto dealers--I
repeat--auto dealers--are driven by competition. We are driven by
protecting our reputation, providing service to our customers, and
serving our communities.
When the CFPB issues fines on auto lenders for alleged discriminatory
practices, they don't punish the dealers. They punish the consumer, the
very people they are trying to supposedly protect, just as most
government involvement does.
Mr. Guinta's bill would finally bring transparency and clarification
to a process that has had neither.
Mr. Chairman, I know Director Cordray and all those at the CFPB think
they can control my industry by controlling the lenders we do business
with. But let's not lose sight on what the law says.
I urge passage of H.R. 1737. Let your conscience be your guide.
Ms. MAXINE WATERS of California. Mr. Chairman, I yield 2 minutes to
the gentleman from California (Mr. Garamendi), a former insurance
commissioner of California who has dealt with a lot of these issues.
Mr. GARAMENDI. Mr. Chairman, I thank the gentlewoman.
My colleague from California has raised a very significant issue
here. It kind of helps to actually read the guidelines.
I have spent 8 years of my life as a regulator trying to protect the
consumers from unfair practices in the insurance industry, some of
which dealt with the issue of credit.
What we have here is an effort by the CFPB to give guidance--not a
law, not a regulation, but guidance--to auto dealers and to indirect
lenders on what they should do--not must do, but what they should do--
to obey the Equal Credit Opportunity Act, which the CFPB actually does
have the power to enforce.
By extension, an indirect lender stands in the place of an auto
dealer in developing the terms of credit. That then makes the indirect
lender subject to the Equal Credit Opportunity Act.
It is pretty simple here. This is guidance about how you could
monitor what you should do as a dealer or as an indirect lender in
obeying the Equal Credit Opportunity Act.
It is pretty simple. And when you don't do it, there are outlines
about what you should do to deal with any problem that is found.
I am going: What is the problem here? The problem here is obeying the
law as an indirect lender where you actually have the power to direct
and to determine what the loan is.
Now, my history in regulating the insurance industry is that there is
a pernicious and continuing discrimination that takes place, not
necessarily Black, not necessarily Hispanic, but it exists in the
poorer communities and keeps those communities down because they wind
up paying a whole lot more for insurance, for credit, and for other
economic policies. Pretty simple.
The Acting CHAIR. The time of the gentleman has expired.
Ms. MAXINE WATERS of California. I yield the gentleman an additional
30 seconds.
Mr. GARAMENDI. Let me wrap up very quickly, then.
This is about being fair in the practices of lending. I understand
the auto dealers and the indirect lenders would rather not, but there
is a history here, as has been stated in the debate, of where lenders
have been found to be out of compliance with the Equal Credit
Opportunity Act.
So what we are trying to do here with this opposition to this bill is
saying to follow the guidance, follow the guidance and stay out of
trouble. Pretty simple.
Mr. HENSARLING. Mr. Speaker, I yield 2 minutes to the gentleman from
Arkansas (Mr. Hill).
Mr. HILL. Mr. Chairman, I rise today in support of my colleague from
New Hampshire on his bipartisan bill to reform and assist our Nation's
auto dealers and consumers and increase the oversight and transparency
of the Consumer Financial Protection Bureau.
Dodd-Frank explicitly prohibited the CFPB from regulating auto
dealers, but their guidance on indirect auto lending is an end around
to indeed do just that, regulate auto dealer sales.
Not only is the CFPB's guidance inherently flawed, but the agency has
not provided the opportunity for public comment or input, nor have they
shared any of their analysis or assumptions on which they based their
model.
This guidance is another example of emerging government price
regulation and fee setting in the financial services industry. We have
always, as a part of our financial regulation, tried not to set price
by regulatory directive. Instead, we have operated on a consumer
disclosure and consumer education model.
But price regulation is clearly what this guidance does. It is softer
and more delicate in its language, but it clearly is leading towards
price regulation.
Consumer lending in banking is down among community banks. It has
been cut in half over the past few years. One reason for that, one key
reason for that, is the inability of a consumer bank to price for risk.
Today's legislation is not about discrimination. It is about giving
access to credit to people who need it and giving access to credit to
them in the right way, particularly those families with limited
resources.
This bill in no way ties CFPB's hands. It merely gives the public an
opportunity to comment on the Bureau's
[[Page H8307]]
attempt to reshape the auto loan market.
Whether it is in a rural area or an urban area, this pernicious
expansion of price regulation in financial services by the Federal
Government will have a negative effect on credit allocation in our
communities.
Mr. Chairman, I include in the Record a letter from the Independent
Community Bankers of America.
Independent Community
Bankers of America,
Washington, DC, July 27, 2015.
Hon. Jeb Hensarling,
Chairman, Committee on Financial Services, House of
Representatives, Washington, DC.
Hon. Maxine Waters,
Ranking Member, Committee on Financial Services, House of
Representatives, Washington, DC.
Dear Chairman Hensarling and Ranking Member Waters: On
behalf of the more than 6,000 community banks represented by
ICBA, I write to thank you for scheduling a markup for July
28 on important regulatory reform bills. We are particularly
pleased that a number of the bills scheduled for markup
reflect community bank regulatory relief advanced in ICBA's
Plan for Prosperity. We strongly encourage all committee
members to vote YES on the bills noted below:
The Financial Institution Customer Protection Act (H.R.
766). Sponsored by Rep. Blaine Luetkemeyer, H.R. 766 is
designed to curtail the abuses of Operation Choke Point. The
bill would prohibit the federal banking agencies from
suggesting, requesting, or ordering a bank to terminate a
customer relationship unless the regulator put the order in
writing and specified a material reason for the action, among
other provisions.
The Portfolio Lending and Mortgage Access Act (H.R. 1210).
Sponsored by Rep. Andy Barr, H.R. 1210 would provide that any
residential mortgage held in portfolio by the originator is a
``qualified mortgage'' for the purposes of the Consumer
Financial Protection Bureau's ``ability to repay'' rule. H.R.
1210 will help preserve access to credit for customers of
community banks and other lenders.
The Small Bank Exam Cycle Reform Act of 2015 (H.R. 1553).
Sponsored by Rep. Scott Tipton, H.R. 1553 would allow a
highly rated community bank with assets of less than $1
billion to use an 18 month exam cycle. ICBA supports a 24
month exam cycle for highly rated community banks. Because
examiners have more than sufficient information to monitor a
community bank from offsite, we believe that this change
would not compromise supervision, and would actually increase
safety and soundness by allowing examiners to focus their
limited resources on the true sources of risk.
The Reforming CFPB Indirect Auto Financing Guidance Act
(H.R. 1737). Sponsored by Rep. Frank Guinta, H.R. 1737 would
effectively nullify the CFPB's guidance on indirect auto
lending. In proposing and issuing guidance primarily related
to indirect auto financing, the CFPB would be required to
provide for a public notice and comment period, make
available all studies, data, and other information on which
the guidance is based, and meet other requirements intended
to ensure the process is open, transparent, and responsive to
public input. The CFPB would also be required to consult with
the Board of Governors of the Federal Reserve System, the
Federal Trade Commission, and the Department of Justice. ICBA
suggests strengthening H.R. 1737 by requiring the CFPB to
also consult with the Federal banking regulators, the Federal
Deposit Insurance Corporation and the Office of the
Comptroller of the Currency.
Financial Institutions Examination Fairness and Reform Act
(H.R. 1941). Sponsored by Reps. Lynn Westmoreland and Carolyn
Maloney, H.R. 1941 would go a long way toward improving the
oppressive examination environment that many community banks
experience during and following an economic downturn.
Among other other provisions, H.R. 1941 would create an
Office of Independent Examination Review within the Federal
Financial Institutions Examination Council and give financial
institutions a right to an expedited, independent review of
an adverse examination determination before the Office's
Director or before an independent administrative law judge.
ICBA also supports the provisions of H.R. 1941 that would
create more consistent and commonsense criteria for loan
classifications and capital determinations. Establishing
conservative, bright-line criteria will allow lenders to
modify loans, as appropriate, without fear of being
penalized. If these standards become law, they will give
bankers the flexibility to work with struggling but viable
borrowers and help them maintain the capital they need to
support their communities.
The Homebuyers Assistance Act (H.R. 3192). Sponsored by
Rep. French Hill, H.R. 3192 would provide a critical safe
harbor from enforcement actions for compliance errors arising
from the implementation of the Consumer Financial Protection
Bureau's Truth in Lending Act/Real Estate Settlement
Procedures Act Integrated Disclosures, provided the lender
has acted in good faith to implement and comply with new
regulations. Without this safe harbor, consumer mortgage
closings are likely to be delayed due to the enormous
complexity of the new rules and fear of excessive enforcement
actions for minor errors.
Taken together, the bills noted above would provide
significant regulatory relief for community banks to the
benefit of the customers and communities they serve. We will
continue to press lawmakers to enact these sensible
regulatory relief measures into law.
Thank you again for bringing these bills before the
committee.
Sincerely,
Camden R. Fine,
President & CEO.
{time} 1445
Ms. MAXINE WATERS of California. Mr. Chairman, I yield 2 minutes to
the gentleman from Maryland (Mr. Sarbanes), a true champion for
consumers.
Mr. SARBANES. I thank the gentlewoman for yielding.
Mr. Chairman, I oppose H.R. 1737.
The title of this legislation, the Reforming CFPB Indirect Auto
Financing Guidance Act, is misleading. The legislation is not about
``reforming'' the guidance of the CFPB. It is about erasing and
undermining CFPB's guidance altogether and suspending the Bureau's good
work when it comes to monitoring and identifying discrimination in auto
lending. Both the CFPB and the Department of Justice have found
repeatedly that dealer discretion in determining the interest rates on
auto loans leads to systemic discrimination against minority borrowers.
Supporters have argued that this legislation would bring clarity and
transparency to the auto loan market, but we must ask ourselves:
Clarity and transparency for whom? It sure doesn't bring transparency
for the American public when it comes to auto dealers who have been
found to have been targeting minority communities with discretionary
interest rate markups, increasing the carrying costs of car ownership
for individuals who too often cannot afford the increased financial
burden.
Of course, not all auto dealers engage in such practices, and we must
be careful in painting with a broad brush. In fact, I believe the
CFPB's guidance is a useful tool to protect the reputation of auto
dealers who do the right thing by their customers--many of whom are
leaders in their communities--against the predatory practices of a
select few who tarnish the industry.
We should have clarity and transparency--clarity and transparency in
how interest rates are determined so as to prevent discriminatory
lending practices--but let the CFPB do its job, the Consumer Financial
Protection Bureau.
Wall Street, the lenders, the mortgage companies, the big banks blew
up our economy in 2009. They were exploiting a lot of consumers across
the country. We set up the CFPB to protect financial consumers across
the country. Let the CFPB do the job that it was given, which it is
doing very well.
I urge my colleagues to reject H.R. 1737 and support the CFPB's
ongoing work on behalf of American consumers.
Mr. HENSARLING. Mr. Chairman, may I inquire as to how much time is
remaining on both sides.
The Acting CHAIR. The gentleman from Texas has 3\1/2\ minutes
remaining, and the gentlewoman from California has 4\1/2\ minutes
remaining.
Mr. HENSARLING. Mr. Chairman, I yield 2 minutes to the gentleman from
Pennsylvania (Mr. Kelly).
Mr. KELLY of Pennsylvania. I thank the gentleman.
Mr. Chairman, I stand in strong support of H.R. 1737, and I will tell
you why. It is because it is what I have done and what my family has
done for almost 60 years. We are a third-generation automobile dealer.
I can tell you that it is a people business, not a White person
business, not a Black person business, not a Brown person business, not
a Red person business, or a Yellow person business. It is a business
that is done face-to-face. I have sat across the desk from many people,
lower income people, who cannot afford to get a car because they don't
have the ability to negotiate the auto loan.
It is our business, and I am stunned by people who have never done
what we have done who have somehow decided that we are racist and that
we are overcharging people. We are doing exactly the opposite, and you
are doing exactly the opposite. You are discriminating against the very
people who need our help to buy cars. We negotiate the deal
[[Page H8308]]
for them. We negotiate the cost down. So to stand here today and think
that somehow this is racist--if I were a person of color, I would be
offended that you would even begin to suggest that I do not understand
how to negotiate and that I do not understand who to trust and who not
to trust.
Three generations of Kellys have sold over 150,000 cars. You don't do
that by cheating people. You don't do that by being a racist. You don't
do that by discriminating against people. You do that by working with
people. It is stunning in this House--America's House--that we would
reduce this down to an issue of color and not of cooperation. The
ability to get these people transportation--private transportation--
falls on the shoulders of those who are the dealers. We negotiate in
their best interest.
How stunning to think that somehow we are these predators who are
just taking advantage of these poor people who don't have any financial
literacy. That, my friends, ultimately, is the biggest insult you could
give people of color or people of gender. It is absolutely incredible
to me that we would bring it to this issue.
If you don't understand our business, please learn about it. I don't
have to have a book of talking points in order to talk about what we
have done our whole life.
I stand in strong support of H.R. 1737 and in strong support of
common sense and the American way.
The Acting CHAIR. Members are reminded to direct their remarks to the
Chair.
Ms. MAXINE WATERS of California. Mr. Chairman and Members, no one on
this side of the aisle mentioned the word ``racist.'' It is only coming
out of the mouths of the people on the opposite side of the aisle.
I yield 2 minutes to the gentleman from Colorado (Mr. Perlmutter), a
member of the Financial Services Committee.
Mr. PERLMUTTER. I thank the gentlewoman from California, my ranking
member. I appreciate the emotionally charged conversation that we are
having here on the House floor today.
Mr. Chairman, I rise in support of H.R. 1737.
In the 14th Amendment to the Constitution of the United States, there
are two basic principles among the others that are noted. One is that
no one shall be deprived of life, liberty, or property without due
process of law. The other one is that no one shall be denied equal
protection under the laws of the United States of America.
We have kind of a collision of these two principles today. One is
that there is the potential for the disparate treatment of people--
discrimination--which all of us abhor and that we want to see rooted
out by root and branch. The other is that, before you do a major policy
in this country, there is always notice and an opportunity to be heard.
That is where the collision comes in today.
The Consumer Financial Protection Bureau issued a bulletin without,
really, notice and an opportunity to be heard to determine whether or
not there was disparate treatment or whether methodologies that
indicate there is are accurate. In fact, what we have seen is, 4 out of
10 times, it can be inaccurate based on this bulletin.
So H.R. 1737, with as much emotion as it has raised, asks the CFPB to
go back and check what they have done. At no time is there any
limitation to CFPB's or to the Department of Justice's rights under the
Equal Credit Opportunity Act to go after discriminating individuals, to
go after bad actors.
I would suggest to the CFPB that, while they are looking at their
bulletin again, if they see evidence of discrimination, they refer it
to the Justice Department and that it be condemned loudly and roundly.
Mr. HENSARLING. Mr. Chairman, I reserve the balance of my time.
Ms. MAXINE WATERS of California. Mr. Chairman, I yield myself the
balance of my time.
Mr. Chairman and Members, this discussion today has been about
discrimination. This discussion today is about the very powerful
automobile dealers who come to the Congress of the United States and
use their considerable influence to get the Members of Congress to get
rid of a guidance that was put together by the Consumer Financial
Protection Bureau.
They don't want the guidance because they don't want to be guided in
how not to discriminate. They have gotten away for years with markups,
and they have gotten away for years with targeting certain communities.
For those who say that this has not happened, you are absolutely wrong.
Minority communities, poor communities are targeted by every scheme and
every fraudulent operation that you can think of.
Whether we are talking about this markup that causes minorities to
pay more for automobiles or payday loans or whether we are talking
about these private, postsecondary rip-off schools, communities of
color are not only targeted in these ways, but we discovered in the
2008 subprime meltdown that communities have been targeted and that
minorities who have the same credit ratings as others who are given
loans--minorities who pay their bills--were charged more in interest
rates for their mortgages than others.
This is not something that we are making up. The people on the
opposite side of the aisle will have you believe they are working in
the best interest of these minorities who continue to be ripped off. I
don't have to say much, if anything, to prove that that is not true.
Just take a look at who is supporting them. We are supported by the
NAACP, the National Council of La Raza, the National Association of
Minority Auto Dealers, the Center for Responsible Lending, the National
Consumer Law Center, the Center for Working Families, the Consumers
Union. There are 67 consumer organizations who are sick and tired of
seeing minorities being ripped off.
We are often counseled by those who say we are not pulling ourselves
up by our bootstraps, that we are not doing enough. Why do you think a
wealth gap exists? It exists because these fraudulent schemes are
supported by people like those on the other side of the aisle.
I urge everyone in Congress to vote ``no'' on this discriminatory
legislation.
Mr. Chairman, I yield back the balance of my time.
Mr. HENSARLING. Mr. Chairman, I yield myself the balance of my time.
It is fascinating to me how often the ranking member talks about
discrimination, but she didn't seem to talk about the discrimination
coming out of the CFPB. She knows good and well, Mr. Chairman, that we
have had witness after witness not come up with junk science about some
disparate impact methodology that is proven wrong, but we have had
actual witnesses come and talk about discrimination at the CFPB, which,
apparently, the other side is now holding up as a paragon of virtue to
enforce our civil rights laws.
We have had the inspector general come and say, at the CFPB,
minorities are underrepresented in upper pay bands. The inspector
general says minority applicants are not hired in proportion to
qualifications. The inspector general says minority employees receive
lower performance ratings. We have had one division of the CFPB that
employees refer to as the ``plantation.'' This is in the 21st century?
Now the ranking member wants to hold up the CFPB as some paragon of
virtue because they use junk science--a methodology they admit
themselves overrepresents minority populations?
This is about due process, Mr. Chairman, due process for every
American. We can't have some rogue agency putting out guidance and not
allowing any public comment. We cannot allow this agency, regardless of
what its motivations may be, to ultimately take away the credit
opportunities of hard-working Americans who are trying to get ahead. We
cannot let this rogue agency increase prices.
It is time for us to support the legislation. I encourage all Members
to support it.
Mr. Chairman, I yield back the balance of my time.
Ms. NORTON. Mr. Chair, I join many of my Democratic colleagues, as
well as the NAACP, the Leadership Conference on Civil and Human Rights,
the National Council of La Raza, the National Association of Minority
Automobile Dealers, and many other civil rights groups, in opposing
H.R. 1737, the Reforming CFPB Indirect Auto Financing Guidance Act, a
bill that would significantly diminish the Consumer Financial
Protection Bureau's (CFPB) ability to protect consumers
[[Page H8309]]
from racial discrimination in the auto lending market and give auto
dealers a leg up in charging higher interest rates, and, as studies
have shown, in discrimination. In 2013, the CFPB issued guidance that
was aimed at combatting these biases in the auto lending industry--
because of a practice used by car dealers known as ``markups,'' people
of color were paying more for car loans than their white counterparts
with similar or identical credit histories.
As the former chair of the Equal Employment Opportunity Commission, I
am dismayed by the practice of ``markups,'' which allows discriminatory
car dealers, who get a cut of the additional charges and fees that
markups provide, to profit from their bad behavior. The CFPB has done
important work toward eradicating discriminatory lending practices. I
oppose this bill, and I urge my colleagues to do the same.
The Acting CHAIR. All time for general debate has expired.
Pursuant to the rule, the bill shall be considered for amendment
under the 5-minute rule. The bill shall be considered as read.
The text of the bill is as follows:
H.R. 1737
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Reforming CFPB Indirect Auto
Financing Guidance Act''.
SEC. 2. NULLIFICATION OF AUTO LENDING GUIDANCE.
Bulletin 2013-02 of the Bureau of Consumer Financial
Protection (published March 21, 2013) shall have no force or
effect.
SEC. 3. GUIDANCE REQUIREMENTS.
Section 1022(b) of the Consumer Financial Protection Act of
2010 (12 U.S.C. 5512(b)) is amended by adding at the end the
following:
``(5) Guidance on indirect auto financing.--In proposing
and issuing guidance primarily related to indirect auto
financing, the Bureau shall--
``(A) provide for a public notice and comment period before
issuing the guidance in final form;
``(B) make available to the public, including on the
website of the Bureau, all studies, data, methodologies,
analyses, and other information relied on by the Bureau in
preparing such guidance;
``(C) redact any information that is exempt from disclosure
under paragraph (3), (4), (6), (7), or (8) of section 552(b)
of title 5, United States Code;
``(D) consult with the Board of Governors of the Federal
Reserve System, the Federal Trade Commission, and the
Department of Justice; and
``(E) conduct a study on the costs and impacts of such
guidance to consumers and women-owned, minority-owned, and
small businesses.''.
The Acting CHAIR. No amendment to the bill shall be in order except
those printed in House Report 114-340. Each such amendment may be
offered only in the order printed in the report, by a Member designated
in the report, shall be considered as read, shall be debatable for the
time specified in the report, equally divided and controlled by the
proponent and an opponent, shall not be subject to amendment, and shall
not be subject to a demand for division of the question.
Amendment No. 1 Offered by Mr. Gosar
The Acting CHAIR. It is now in order to consider amendment No. 1
printed in House Report 114-340.
Mr. GOSAR. Mr. Chairman, I have an amendment at the desk.
The Acting CHAIR. The Clerk will designate the amendment.
The text of the amendment is as follows:
Page 4, line 11, insert ``veteran-owned,'' after
``minority-owned,''.
The Acting CHAIR. Pursuant to House Resolution 526, the gentleman
from Arizona (Mr. Gosar) and a Member opposed each will control 5
minutes.
The Chair recognizes the gentleman from Arizona.
{time} 1500
Mr. GOSAR. Mr. Chairman, I rise today to offer a commonsense
amendment to H.R. 1737.
This simple amendment ensures that any costs or potential impacts to
any and all veteran-owned businesses are considered and included in the
study required by this bill for any future auto financing guidance that
may be put forth by the Consumer Financial Protection Bureau.
The three main categories that the SBA utilizes for set-aside
government contracts are women-owned, minority-owned, and veteran-owned
businesses. The base bill requires a report that would include any cost
or impacts associated with new guidance for minority-owned businesses
and women-owned businesses.
I think we should all agree that it only makes common sense, then, to
also consider any costs or implications for our Nation's heroes and
veteran-owned businesses that may arise from any future guidance being
considered.
Our servicemen and -women already face tough challenges finding work
when they return from service. In recent years, veterans' unemployment
numbers have been some of the highest in the country and, at times,
have been in double digits. Earlier this year, post-9/11 veterans faced
unemployment numbers north of 7.2 percent. We shouldn't let any
potential future guidance from an already rogue agency created under
Dodd-Frank exacerbate employment hurdles for our Nation's veterans.
One week ago today, we celebrated Veterans Day and the patriotic
service that so many men and women have given to this great Nation. We
have asked these heroes to risk their lives for this country, and many
of our veterans have answered that call time and time again, including
multiple tours overseas. Most veterans return from service seeking not
only to reintegrate and establish normal lives, but to continue serving
their country by contributing to the workforce, finding jobs, and even
creating jobs for others by starting small businesses.
My amendment is a simple measure and will help ensure veteran-owned
businesses are not harmed by any future auto financing guidance put
forth by CFPB.
Chairman Hensarling supports this amendment. I thank the chairman for
his support and also for bringing forth this commonsense bill that
rejects this misguided guidance. I also applaud the chairman and
committee for everything they do to advocate for small businesses and
job creators throughout the country.
I ask that all my colleagues support our veterans and the businesses
they own by voting in favor of my commonsense amendment.
I reserve the balance of my time.
Ms. MAXINE WATERS of California. Mr. Chairman, I claim time in
opposition to the amendment.
The Acting CHAIR. The gentlewoman is recognized for 5 minutes.
Ms. MAXINE WATERS of California. I yield myself such time as I may
consume.
Mr. Chairman, this amendment compounds one of the underlying problems
that I have expressed in my opposition to H.R. 1737.
While I have been and continue to be one of Congress' most vocal
supporters of minority-owned businesses, further expanding an already
unnecessary cost-benefit study concerning the impacts of nonbinding
policy guidance is unproductive and only increases the likelihood that
future guidance designed to actually help lenders comply with the law
is further delayed or never issued.
Mr. Chairman and Members, I want you to understand what is being said
by the opposite side of the aisle. They basically are saying: Help me
to look out for our veterans and make sure that they don't have any
guidance that would impede their ability to do business. Well, I mean,
that is kind of a made-up problem.
This is not a problem. Simply, what is happening by the attempt to
throw veterans into this is to get Members thinking ``perhaps I want to
support this amendment because I don't want to be thought of as not
supporting veterans.'' When you talk about cost-benefit analysis and
studies, what you are talking about is: How do I tie up the agency? How
do I create impediments to the agency being able to do its job.
This Congress supports veterans in so many ways. We support them in
their quest to do business, and we have laws on the books that will
help them to successfully get into business. We support them in
housing. We support them with better health care.
I don't want any Members of Congress to think somehow this kind of
made-up amendment is something that really they should be supporting if
they want to help veterans. This is simply a way by which to get you to
do something, making you think you are supporting veterans and thinking
you cannot oppose it.
This is an unnecessary amendment, and it gets in the way of good
guidance coming out of the Consumer Financial
[[Page H8310]]
Protection Bureau, so I would ask you to vote ``no'' on this amendment.
I reserve the balance of my time.
Mr. GOSAR. I can't believe, Mr. Chairman, what I just heard. I just
can't believe it. I hope that veterans who are watching C-SPAN today
are listening carefully, listening very carefully about this amendment.
The three divisions which it oversees, the veterans were left out,
and we just want to make sure that our veterans are included in any
study that CFPB would go forward with.
That is sad. That is sad.
When we talk about the Veterans Administration being so pristine,
when we look at their healthcare system, it is 50 percent worse than it
was a year ago. Many of the veterans that I have in rural Arizona are
struggling to find anybody that will even hear from them.
What a sad shame. What an absolute shame.
So I actually would ask my colleagues to vote for this amendment. It
is pretty straightforward. I think America gets it.
I reserve the balance of my time.
Ms. MAXINE WATERS of California. I yield back the balance of my time.
Mr. GOSAR. Mr. Chairman, I yield 30 seconds to the gentleman from
Texas (Mr. Hensarling).
Mr. HENSARLING. Mr. Chairman, I urge all Members to adopt this
amendment.
I must admit, if people all over America are wondering why it is so
difficult to get something done on a bipartisan basis, traditionally,
the least controversial thing we do here is study something. What is
even less controversial is coming together on behalf of our veterans,
yet we have the ranking member of this committee opposing both. I hope
the American people are watching closely.
Again, I think this is a very commonsense, modest amendment by the
gentleman from Arizona. I encourage all Members to vote for it.
Mr. GOSAR. Mr. Chairman, once again, I ask all Members to vote for
this.
I yield back the balance of my time.
The Acting CHAIR (Mr. Byrne). The question is on the amendment
offered by the gentleman from Arizona (Mr. Gosar).
The amendment was agreed to.
Amendment No. 2 Offered by Mr. Smith of Missouri
The Acting CHAIR. It is now in order to consider amendment No. 2
printed in House Report 114-340.
Mr. SMITH of Missouri. Mr. Chairman, I have an amendment at the desk.
The Acting CHAIR. The Clerk will designate the amendment.
The text of the amendment is as follows:
Page 4, line 12, strike the first period and insert ``,
including consumers and small businesses in rural areas.''.
The Acting CHAIR. Pursuant to House Resolution 526, the gentleman
from Missouri (Mr. Smith) and a Member opposed each will control 5
minutes.
The Chair recognizes the gentleman from Missouri.
Mr. SMITH of Missouri. Mr. Chairman, the American people have been
misled. They were incorrectly told that Dodd-Frank was meant to go
after big banks and Wall Street. However, in my rural congressional
district, the effects of this law and its close to 500 regulations have
been devastating.
The total economic cost of Dodd-Frank-based regulations has eclipsed
$35 billion and over 60 million hours of paperwork burdens. That is the
equivalent of 30,000 employees a year dedicated solely to regulatory
paperwork. A new army of regulators aren't the kind of jobs that
Americans were promised.
The biggest and most costly regulation to come out of Dodd-Frank is
the deceptively named Consumer Financial Protection Bureau, an
unconstitutional, uncontrollable, and unaccountable agency whose total
negative impact on our economy won't be known for decades.
The CFPB was supposed to protect consumers from the predatory
practices of financial institutions. Instead, it has limited Americans'
access to credit, the ability to be financially independent, and
impeded the availability of homes and, in this case, cars. The CFPB
achieved this by hiring big, spending big, and regulating big.
The CFPB started with a staff of 178 in 2011 but now has close to
2,000 employees. In that same period, its annual spending grew from $10
million to, now, $600 million. The safest place to find a job in this
government economy is with a Federal financial regulator. In the last 5
years, those regulators have seen a 16 percent increase in job growth.
The CFPB still has more regulations and guidance in its pipeline just
ready to roll out and crush rural America. That is why this amendment
is so important.
In the endless search for a job in this economy, many Americans are
forced to migrate to urban areas. In 2013, over half of all the rural
counties in the United States actually shrank in population. In 2014,
according to the Department of Labor, rural counties lost 330,000 jobs,
while metropolitan counties gained over 3 million jobs. The last thing
Washington should be doing is authoring regulations which further
enable this trend.
With adoption of H.R. 1737 and this amendment, we are telling the
CFPB that, when you issue regulations like this, in addition to
analyzing the impact on women-owned, minority-owned, and small
businesses, you must also take a look at those regulations' impact on
rural businesses and rural consumers.
My amendment is a simple one, but it would go a long way to providing
some clarity for the folks of Missouri's Eighth Congressional District
and all of those Americans living in rural communities across the
Nation. While 1600 Pennsylvania Avenue might be looking at ways to make
their life harder, this body, this Chamber, will continue to fight to
make sure the Federal Government stays out of their way.
I thank my friend and colleague from New Hampshire for introducing
this legislation. Burdensome regulation is a problem that hits rural
America the hardest. I urge adoption of the amendment.
I reserve the balance of my time.
Ms. MAXINE WATERS of California. I claim time in opposition to the
amendment.
The Acting CHAIR. The gentlewoman is recognized for 5 minutes.
Ms. MAXINE WATERS of California. I yield myself such time as I may
consume.
Mr. Chairman and Members, I am in opposition to this bill because it
is simply another study, another cost to government, another
unnecessary cost. While my friends on the opposite side of the aisle
always claim that they are reducing the cost of government, these
studies do very little.
As a matter of fact, instead of a study, some of these Members who
represent rural areas ought to become real advocates for their
constituencies. They charge many of us as being advocates for health
care, education, housing, and transportation, all of which they lack in
their communities, but you never see them fighting for it. If it were
not for some of us who are out there demanding better health care,
better transportation systems, better education, and fighting for those
who get ripped off by these fraudulent businesses every day, they
wouldn't have any protection because they send too many Members to
Congress who mislead them on other kinds of issues, but when it comes
to their economics, you cannot find them anywhere.
So, instead of a study, another study, another cost to government,
why don't they become real advocates for their constituency? Why is it
that we don't have transportation systems in rural communities? Why is
it they have to travel miles for health care? It is because they have
Representatives whom they send to Congress who are really not
representing their real interests. They may get their colleagues to
vote for yet another study because they don't do anything that is real
and substantive for their communities.
I yield back the balance of my time.
Mr. SMITH of Missouri. Mr. Chairman, I urge adoption of the
amendment.
I yield back the balance of my time.
The Acting CHAIR. The question is on the amendment offered by the
gentleman from Missouri (Mr. Smith).
The amendment was agreed to.
Amendment No. 3 Offered by Ms. Sewell of Alabama
The Acting CHAIR. It is now in order to consider amendment No. 3
printed in House Report 114-340.
[[Page H8311]]
Ms. SEWELL of Alabama. Mr. Chairman, I have an amendment at the desk
listed as Sewell Amendment No. 3.
The Acting CHAIR. The Clerk will designate the amendment.
The text of the amendment is as follows:
Add at the end of the bill the following:
SEC. 4. RULE OF CONSTRUCTION.
Nothing in this bill shall be construed to apply to
guidance issued by the Bureau of Consumer Financial
Protection that is not primarily related to indirect auto
financing.
The Acting CHAIR. Pursuant to House Resolution 526, the gentlewoman
from Alabama (Ms. Sewell) and a Member opposed each will control 5
minutes.
The Chair recognizes the gentlewoman from Alabama.
Ms. SEWELL of Alabama. Mr. Chairman, I rise today in support of my
amendment to H.R. 1737.
My amendment is a commonsense and straightforward amendment. It
simply states that nothing in this bill shall be construed to apply to
guidance issued by the CFPB that is not primarily related to indirect
auto financing.
This amendment is intended to help ensure that the underlying bill in
no way prohibits, disrupts, or affects the enforcement of other fair
lending laws or guidance that protects millions of Americans from
unfair or discriminatory lending practices.
The underlying bill, H.R. 1737, provides the CFPB with criteria to
consider when issuing further guidance on indirect auto lending. While
I agree that the CFPB should reevaluate its recent guidance, we should
also ensure that the scope of this legislation stays narrow and applies
only to indirect auto financing.
Mr. Chairman, I applaud the CFPB's efforts to protect consumers from
discriminatory lending practices. We can all agree that no one supports
or should condone abusive or discriminatory practices in auto lending
or in any area of the marketplace. However, it is our job as Members of
Congress to offer guidance and constructive critique to our regulatory
agencies to enforce and ensure that regulations are pragmatic and
workable.
This noncontroversial amendment simply clarifies that the other
valuable tools possessed by the CFPB are not infringed upon and ensures
that there is no room for ambiguity. The CFPB plays a critical role in
protecting consumers and buyers. My amendment helps ensure that laws
like the Equal Credit Opportunity Act and other fair lending laws are
not inadvertently or directly affected by this bill.
{time} 1515
My amendment helps ensure that the Bureau continues to play this role
while hardworking Americans continue to have access to the necessary
credit to purchase any central mode of transportation. I urge support
of this amendment.
Mr. Chair, I reserve the balance of my time.
Mr. HENSARLING. Mr. Chairman, I ask unanimous consent to claim the
time in opposition to the amendment, although I am not opposed.
The Acting CHAIR (Mr. Smith of Missouri). Is there objection to the
request of the gentleman from Texas?
There was no objection.
The Acting CHAIR. The gentleman from Texas is recognized for 5
minutes.
Mr. HENSARLING. Mr. Chairman, the gentlewoman from Alabama is a
valued member of the Committee on Financial Services. The absolute
worst thing I could say about her amendment is it might be redundant.
Hopefully it is. But if it is not, we want to simply clarify, again,
that the underlying bill from the gentleman from New Hampshire only
deals with this auto finance guidance.
Again, absolutely nothing in the underlying bill to H.R. 1737 in any
way, shape, or form affects the CFPB's ability to enforce the Equal
Credit Opportunity Act. If this clarification is needed, I am happy
that the gentlewoman is offering it, and I would urge its adoption.
Mr. Chairman, I yield back the balance of my time.
Ms. SEWELL of Alabama. Mr. Chairman, I yield such time as she may
consume to the gentlewoman from California (Ms. Waters), the ranking
member of the committee.
Ms. MAXINE WATERS of California. Mr. Chairman, I thank the
gentlewoman for yielding time.
As Mr. Hensarling said, it may be redundant, but that is okay. It
reinforces basically what we have been talking about in relationship to
1737.
I will just take a moment to say how proud I am of the Consumer
Financial Protection Bureau, how proud I am of Mr. Cordray, how pleased
I am that this is the centerpiece of the Dodd-Frank reform, how pleased
I am that we now have an agency that is looking out for consumers.
Prior to the Consumer Financial Protection Bureau, our regulatory
agency said their job was for safety and soundness. They forgot about
the consumers; they were dropped off the agenda.
Now we have a Consumer Financial Protection Bureau that is
challenging the practices of many who claim they are in legitimate
businesses. They are challenging them. They are saying to them: No
longer can you rip off our consumers. No longer can you target
minorities. No longer can you have discriminatory practices.
Thank God for the Consumer Financial Protection Bureau.
Ms. SEWELL of Alabama. Mr. Chairman, I want to thank the ranking
member, Congresswoman Waters, for her diligence on this committee. She
serves as a model for all of us in her vigor and fervor for making sure
that we are not discriminating against average Americans. All of us
agree that nothing we do should be about discriminating or adding to
the effects of discrimination.
I ask for support of this amendment.
Mr. Chairman, I yield back the balance of my time.
The Acting CHAIR. The question is on the amendment offered by the
gentlewoman from Alabama (Ms. Sewell).
The amendment was agreed to.
The Acting CHAIR. There being no further amendments, under the rule
the committee rises.
Accordingly, the Committee rose; and the Speaker pro tempore (Mr.
Byrne) having assumed the chair, Mr. Smith of Missouri, Acting Chair of
the Committee of the Whole House on the state of the Union, reported
that that Committee, having had under consideration the bill (H.R.
1737) to nullify certain guidance of the Bureau of Consumer Financial
Protection and to provide requirements for guidance issued by the
Bureau with respect to indirect auto lending, and, pursuant to House
Resolution 526, he reported the bill back to the House with sundry
amendments adopted in the Committee of the Whole.
The SPEAKER pro tempore. Under the rule, the previous question is
ordered.
Is a separate vote demanded on any amendment reported from the
Committee of the Whole? If not, the Chair will put them en gros.
The amendments were agreed to.
The SPEAKER pro tempore. The question is on the engrossment and third
reading of the bill.
The bill was ordered to be engrossed and read a third time, and was
read the third time.
The SPEAKER pro tempore. The question is on the passage of the bill.
The question was taken; and the Speaker pro tempore announced that
the ayes appeared to have it.
Mr. GUINTA. Mr. Speaker, on that I demand the yeas and nays.
The yeas and nays were ordered.
The SPEAKER pro tempore. Pursuant to clause 8 of rule XX, further
proceedings on this question will be postponed.
____________________