Car-loan bias rule on borrowed time

WASHINGTON — The GOPled Senate voted Wednesday to block Obama-era guidance a consumer protection agency issued five years ago to help ensure lenders don’t charge blacks and Latinos higher interest rates on car loans.

The vote was 51-47. Sen. Joe Manchin of West Virginia was the only Democratic lawmaker to side with Republicans in voting for the measure, which now must pass the House before it goes to President Donald Trump for his signature.

Republicans said that rescinding the guidance is necessary because it amounted to a backdoor attempt to regulate auto dealers.

Congress expressly prohibited such regulation when establishing the consumer protection agency through passage of the DoddFrank Act in 2010.

The legislative battle extends beyond the terms of car loans, however. Opponents warned that the GOP’s fight against government regulations entered a new phase and the Senate vote could be the first of many efforts to nullify agency bulletins and guidance letters issued over the years. Such guidance conveys to the public how regulators interpret existing law and what steps industries should take to comply.

To block the guidance, the GOP is using what had been a rarely successful legislative tool to overturn regulations that were often years in the making. The Congressional Review Act gave Congress the ability to overturn recently issued federal rules with a majority of both chambers of Congress and approval of the president.

Before Trump came into office, Congress had overturned only one federal rule over two decades using the tools available through the Congressional Review Act. Last year, it overturned 15 federal rules.

The GOP expanded on its use of the 1996 law to take on guidance the Consumer Financial Protection Bureau issued regarding certain car loans. Consumer groups called the GOP’s effort a “dangerous precedent” that will lead to uncertainty over whether agency interpretations of a law will be invalidated years after the fact.

But Republicans framed the issue as Congress coming to the rescue of businesses.

“The goal here is simple: We want to protect consumers and job creators from needless interference by the federal bureaucracy,” said Senate Majority Leader Mitch McConnell.

A range of trade groups representing bankers, car dealers and other businesses backed the GOP’s efforts.