Legislation that would attempt to reform and reduce the regulatory authority of the Consumer Financial Protection Bureau advanced out of committee recently and is headed to the floor of the House of Representatives for consideration, but even if the bill passes and becomes law, do not expect anything different from the regulator. The reason?
Because the CFPB has so many ways they can “get” at their intended targets, said one industry lawyer.
The bill that was voted out of committee would limit the CFPB’s ability to regulate the auto finance industry, but regardless of whether it becomes law or not, it is likely that the regulator will continue to exert what it deems to be its moral authority on the financial services industry.
“The CFPB has shown no inclination to respect the spotter of exemptions,” said Alan Wingfield, a lawyer with Troutman Sanders. Even though, in this case, car dealers are exempt from being regulated by the CFPB, the agency “is using other tools to go after them anyway to reform the industry.”
While the repossession industry has been warned for years that the CFPB will be turning its regulatory eyes on agents, so far, that has yet to happen. And while many in the industry are using the CFPB as a tool to sell compliance services or training services or otherwise scare the industry into something that it might not necessarily need, the fact remains that the agency has a broad range of powers that it seems intent on making full use out of.
Even if the auto industry “got legislative relief, until the CFPB is reigned in by creating a board of through appropriations, their track record is that they will get you one way or the other,” Wingfield said. So those who are rooting against the CFPB need to root for some significant changes to occur because small wins are not going to be enough.
“The CFPB is attempting to fundamentally reform the auto loan industry,” Wingfield said. “The CFPB is taking a very broad view of its powers.”