Congress’ dirty maneuver
C
ongress is playing with matches around consumer protections, setting the scene for borrowers to get burned — and for broader repeals of regulations entrenched businesses want to reduce to ashes. Watch your wallet, while keeping the other eye on a malignant legislative maneuver that threatens to torch entire forests of federal regulations at the behest of the necessarily regulated.
Last week, the Senate by a slender majority voted to yank a bulletin the Consumer Financial Protection Bureau issued back in 2013 advising auto dealerships of their liabilities under consumer protection law should they discriminate against borrowers by race.
Bias is a real risk when it comes to auto loans made by car dealers, which often hike the interest charged and take a cut, with the borrower none the wiser. Tests show white car-buyers getting better deals than others even when they had worse credit scores. (Tip: Next time you’re shopping for wheels, shop for a loan, too.)
It’s a head-scratcher why it took Congress to take this step. You’d expect the same White House that vowed to destroy two regulations for every one passed to just rip up the CFPB letter. Unless there’s a larger plan afoot. The instrument of destruction is called the Congressional Review Act, which allows the House and Senate to repeal any agency’s rule with a simple majority vote — easy, peasy — so long as that vote takes place within 60 days of a rule being final. The even bigger prize is a future ban on restoring those rules.
Congress yanked more than a dozen lateObama rules this way, including a CFPB ban on forced arbitration for borrowers.
So how’d they manage in this case to use the maneuver to kibosh a five-year-old piece of federal guidance on auto loans? They asked a congressional watchdog office to declare that old advice letter a rule, restarting the 60-day clock.
If that twisted precedent holds, Congress could thwart legal action on any subject where federal agencies ever cared to clarify how they intend to enforce laws on the books. No, no, no.