Reforming CFPB Indirect Auto Financing Guidance Act

Floor Speech

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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 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.

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.

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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.

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