House rids anti-dis­crim­i­na­tion rule for car loans to mi­nori­ties

South Florida Times - - BUSINESS - Maxine Wa­ters By As­so­ci­ated Press

KEVIN FREKING

WASH­ING­TON (AP) — The GOP-led House of Rep­re­sen­ta­tives voted Tues­day to kill guid­ance from a con­sumer pro­tec­tion agency aimed at ensuring lenders didn't charge mi­nor­ity con­sumers more on car loans. Repub­li­cans have made the roll­back of gov­ern­ment reg­u­la­tions a high pri­or­ity. In this case, they say the Con­sumer Fi­nan­cial Pro­tec­tion Bureau made a back­door at­tempt to reg­u­late how auto deal­ers ne­go­ti­ate loan terms with their cus­tomers, even though Congress ex­plic­itly ex­empted auto deal­ers from the agency's over­sight.

Auto deal­ers of­ten fa­cil­i­tate fi­nanc­ing through a third-party lender. In some cases, the dealer will charge the cus­tomer an in­ter­est rate that is higher than what the third party agreed to charge. The lender then shares part or all of the ex­tra profit with the dealer. The CFPB said the prac­tice led to some mi­nor­ity cus­tomers pay­ing higher in­ter­est rates than sim­i­lar white bor­row­ers. In its guid­ance, it high­lighted the po­ten­tial li­a­bil­ity auto lenders face from dis­crim­i­na­tory "dealer mark-ups" and how that can be avoided.

Crit­ics, in­clud­ing the U.S. Cham­ber of Commerce and the Na­tional Auto Deal­ers As­so­ci­a­tion, said that they ab­hor dis­crim­i­na­tion but that the con­sumer bureau pro­vided lit­tle con­crete ev­i­dence of the prob­lems that its guid­ance was in­tended to ad­dress. The pow­er­ful busi­ness groups called on House law­mak­ers to join the Se­nate in vot­ing to block the agency's guid­ance.With the House vote of 234-175, the mea­sure goes to Pres­i­dent Don­ald Trump for his sig­na­ture.

So far, Repub­li­cans in Congress and Trump have re­pealed 15 rules de­signed to pro­vide health, con­sumer and en­vi­ron­men­tal pro­tec­tions.

Most of the rules were fi­nal­ized dur­ing the Obama ad­min­is­tra­tion's fi­nal months. Repub­li­cans say their reg­u­la­tory roll­backs are res­cu­ing busi­nesses from bur­den­some gov­ern­ment rules.

But the vote over auto lend­ing went to a new level because law­mak­ers voted to re­scind guid­ance is­sued five years ago. Such guid­ance con­veys to the pub­lic how reg­u­la­tors in­ter­pret ex­ist­ing law and what steps in­dus­tries should take to com­ply.

Rep. Mike Kelly, R-Pa., said that his fam­ily has sold thou­sands of cars over the years and that his ex­pe­ri­ence shows that auto deal­ers are try­ing to help peo­ple get af­ford­able trans­porta­tion. He said some­one can't be in busi­ness for 65 years do­ing it the wrong way.

"How in the world can you re­duce this down to dis­crim­i­na­tion?" said Kelly, who's white.

Rep. Maxine Wa­ters, DCalif., said she couldn't believe that in 2018 col­leagues were try­ing to deny that dis­crim­i­na­tion takes place in the fi­nanc­ing of au­tos. She said, "Women have been taken ad­van­tage of, too."

"This res­o­lu­tion is one part of a wide­spread Repub­li­can ef­fort to make it more dif­fi­cult to hold fi­nan­cial in­sti­tu­tions re­spon­si­ble," said Wa­ters, who's black.

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