UPDATED: 5/21/18 8:38 pm ET — adds NADA comment
WASHINGTON — President Donald Trump signed into law a congressional resolution overhauling a rule issued by the Consumer Financial Protection Bureau that aimed to bar discrimination in auto lending, the White House said on Monday.
The joint resolution, which was passed by the Senate and the House of Representatives, is the latest attempt to chip away the watchdog agency’s oversight powers.
Acting bureau director Mick Mulvaney said in a statement that the president’s decision to limit the regulator’s reach reaffirms his belief that the bureau was overreaching federal statutes.
“As an executive agency, we are bound to enforce the law as written, not as we may wish it to be,” Mulvaney said. “In this case, the initiative that the previous leadership at the Bureau pursued seemed like a solution in search of a problem.”
Mulvaney added that he plans to continue working with Congress to bring structural accountability to the bureau while he remains in his current position.
Chris Stinebert, CEO of the American Financial Services Association, said in a statement that the lender association welcomes the new law. “We are working with our members to assess the impact on the vehicle financing industry as it continues to fully comply with all state laws and regulations on vehicle financing,” he said.
On May 8, the House voted 234-175 to overturn the bureau’s 2013 auto lending bulletin. The Senate vote on April 18 was 51-47 to repeal.
The bureau’s 2013 guidance suggested indirect auto lenders either limit dealer reserve– the retail margin dealerships earn for arranging a loan– eliminate dealer discretion on the margin altogether or compensate dealers with a flat fee.
The bureau suggested with the bulletin that variances in dealerships’ discretion caused minorities to be charged higher interest rates than their nonminority counterparts with similar credit, even if no discrimination was intended.
NADA CEO Peter Welch, a longtime proponent of removing the guidance, published a statement Monday congratulating the U.S. House and Senate for focusing on the issue and the President for signing the resolution into law.
“This is a great day for consumers, as Congress and the President have helped to preserve their ability to receive auto loan discounts from local dealerships,” Welch said.
Jackie Charniga and Reuters contributed to this report.