John C. Redding quoted in Auto Finance News article, "CFPB interest rate markup rule headed for vote of disapproval in Senate"
Auto Finance NewsJohn C. Redding
John C. Redding was quoted on April 16, 2018 in an Auto Finance News article, "CFPB interest rate markup rule headed for vote of disapproval in Senate," which discussed that a Senate vote to dismantle the Consumer Financial Protection Bureau’s 2013 bulletin on interest rate caps for indirect auto transactions could be up for a committee vote. The article stated, "The original intent of the CFPB’s rule was to limit racial discrimination during the car buying process by forcing lenders to cap how much dealerships are allowed to markup interest rates on approved loans. The CFPB introduced the provision as a bulletin — meaning it’s just a restatement of laws already at play in the Equal Credit Opportunity Act (ECOA) — however in December the Government Accountability Office (GAO) determined the bulletin an official rule that’s subject to Congressional Approval. Lenders are the ones who enforce the caps on their dealer partners and the CFPB has fined lenders in the past for going beyond 150 basis points. However, it’s unclear how many lenders have switched to that standard."
Redding noted that the rule is "offensive because it puts lenders on the hook for a process that’s ultimately done at the dealerships." He added, "It’s a bit counter-intuitive because this is not the broad view held, but I don’t know that elimination of this bulletin is really going to change much. If the bulletin really is just a restatement of the requirements under ECOA — and the bureau is inclined to pursue it that way — then removal of the bulletin doesn’t seem to change a whole lot."