Reforming CFPB Indirect Auto Financing Guidance Act

Floor Speech

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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.

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