Date: 2015-11-18
Speaker: MAXINE WATERS (democrat)
Chamber: H
State: California

Mr. Chairman. I yield myself 5 minutes. Mr. Chairman and Members. I rise today in opposition to H.R. 1737. which would impede the Consumer Financial Protection Bureaus important work of regulating discriminatory auto lending practices and protecting minority borrowers. In spite of the fact that Chairman HENSARLING just talked about a study. what he didnt tell you is that was a study that was done by the automobile industry. who is supporting this bill. H.R. 1737 would cancel important policy guidance the CFPB provided to lenders to help them comply with Federal fair lending laws. The bill also imposes burdensome restrictions on the issuance of any future auto lending guidance by requiring that the CFPB undergo a public notice and comment period and conduct costbenefit studies before issuing guidance. requirements that have historically only been applied to agency rulemakings. These restrictions are clearly designed to substantially delay or effectively prevent the Bureau from issuing future antidiscrimination guidance to auto lenders. action that would undermine a lenders ability to comply with the law at the expense of minority borrowers. The long shadow of discrimination is still alive and well in some corners of the auto lending marketplace. The CFPB has secured nearly $140 million in relief to minority borrowers since December 2013 in landmark settlements against Ally Financial. Fifth Third Bank. and American Honda Finance Corporation. finding in each case that undisclosed dealer markups caused minority borrowers to overpay for their auto loans by an average of $200 over the life of the loan compared to similarly situated White borrowers. even when considering the borrowers creditworthiness. Mike Jackson. the CEO of the Nations largest auto retailer. AutoNation. commended the CFPBs approach in its settlement with Honda. noting that other lenders should take a close look at the Honda settlement as a template for a solution. Much like Mr. Jackson. I believe that the CFPB is doing a commendable job of tackling a decadesold problem of minority borrowers not getting a fair deal when they obtain financing from dealerships. The Bureaus work in this regard should be supported. but instead. we are faced with H.R. 1737. yet another legislative proposal that would attempt to tie the Bureaus hands as it attempts to inform lenders of the steps that they can take to comply with Federal fair lending laws and to protect minority borrowers. I wouldnt care if everybody were treated the same wayyou charge everybody too muchbut. when you single out a certain segment of our society that happens to be minorities and you charge them more than other borrowers. it is a problem. H.R. 1737 follows a familiar script of industrydriven attempts to undermine the CFPB. Costbenefit analysis. public notice and comment periods. outside rulemakings. unnecessary interagency consultation requirements are all designed to do the same thing. delay and undermine the important work of the CFPB. Instead of addressing the underlying discrimination in indirect auto lending that the CFPB is seeking to address. H.R. 1737 takes away an important tool for lenders seeking to follow the law who have been relying on the guidance for almost 3 years to develop their compliance policies. This is not a modest proposal designed to bring about transparency in the CFPBs oversight of auto lenders. Since issuing its guidance in March 2013. the CFPB has been transparent. It has provided industry with its models for identifying potential fair lending violations. Its supervisory manual describes exactly what the Bureau is seeking when conducting fair lending exams and supervisory highlights that clearly set forth the kinds of business practices that the Bureau will focus on when it examines an indirect auto lender. Furthermore. the CFPBs settlement agreements all follow a similar template that give lenders a glimpse into the kind of remediation that the Bureau will pursue should there be potential fair lending violations within a lenders portfolio. H.R. 1737s supporters have yet to identify what information any additional transparency would yield or what additional information lenders need to comply with Federal fair lending laws. If enacted. H.R. 1737 would actually place lenders at a disadvantage. just as scrutiny for fair lending violations from the CFPB and the DOJ intensifies. We should be working to support efforts to give industry as much information as possible so that they can comply with the law. H.R. 1737 does just the opposite. creating unnecessary uncertainty for lenders. Mr. Chairman. I reserve the balance of my time.