Numerous Democrats and media outlets have accused Republicans of making it easier for car dealers to discriminate against racial minorities by pushing a resolution through Congress to disapprove a guidance document issued in 2013 by the Consumer Financial Protection Bureau.
But the CFPB under the Obama administration picked a fight with Congress on this issue, and it’s not really surprising that it lost. Yet the move doesn’t give lenders a green light to charge minorities more for car loans.
When Congress created the bureau in the 2010 Dodd-Frank act, it specifically exempted conventional auto dealers from the bureau’s jurisdiction. Nevertheless, the CFPB sought to work around that restriction by holding the lenders that finance car sales liable for dealers’ decisions to mark up or discount loan rates for individual customers.
Making matters worse, it laid out its plan to so do in a bulletin explaining how it would enforce compliance by auto lenders with the Equal Credit Opportunity Act — not through a rulemaking subject to public comment and congressional review.
Nevertheless, congressional Republicans, who have been trying since 2013 to overturn the bulletin, jerry-rigged a way to do so this year: They obtained an analysis from the General Accounting Office holding that the bulletin amounted to a “rule” subject to the Congressional Review Act, opening a new 60-day window for Congress to pass a resolution of disapproval on a simple majority vote in both houses. In other words, bye-bye, filibuster, bye-bye, bulletin. The Senate voted to reject the bulletin in April, and the House followed suit Tuesday.
Again, though, the target of this resolution was just a bulletin laying out an enforcement strategy. It has no effect on the underlying law (the Equal Credit Opportunity Act) and regulation that bar lending discrimination. That would be true for any similar use of the Congressional Review Act on prior administrations’ guidance documents.
The bigger problem for consumer advocates is that the Trump administration appointee at the top of the CFPB, Mick Mulvaney, doesn’t seem interested in pursuing new enforcement actions of any kind. Nor do key Republicans support holding lenders liable based on “disparate impact,” which measures an entire portfolio of loans rather than individual lending decisions.
The bottom line is that discrimination by car lenders will remain just as illegal after the bulletin goes away as it was while the bulletin was in effect. There just may not be anyone in the administration interested in enforcing against it.