Rep. Michael Capuano (D-MA) writes:
The House considered S.J. Res. 57, Providing for congressional disapproval under chapter 8 of title 5, United States Code, of the rule submitted by Bureau of Consumer Financial Protection related to “Indirect Auto Lending and Compliance with the Equal Credit Opportunity Act”. The resolution invalidates a five year old guidance document issued by the Consumer Financial Protection Bureau (CFPB) expressing its position that lenders who provide auto financing through dealerships are still subject to compliance with the Equal Credit Opportunity Act’s prohibition on discriminatory lending. After studying the issue, CFPB found that minority borrowers are often given financing at a higher cost and with less favorable terms. Issuing the guidance put the industry on notice that such behavior is illegal and can lead to enforcement action.
The mere fact that the lender is providing the loan indirectly using the car dealership as the intermediary does not absolve the lender from ECOA compliance. Indirect auto lenders include banks such as Wells Fargo and car manufacturers such as Toyota. While some members of Congress have introduced standalone legislation to repeal the CFPB guidance with provisions requiring the CFPB to revise its guidance, this use of the Congressional Review Act (CRA) to repeal a federal agency guidance document is troubling and has consequences far beyond the auto lending issue. If Congress repeals an agency document under CRA, there is no judicial review of that repeal and the agency whose document was repealed is forbidden from issuing a substantially similar rule in the future unless the reissued or new rule is specifically authorized by a law enacted after the CRA resolution disapproving the original rule. Using CRA in this way could cause untold havoc throughout the federal government as any guidance, notice, or rule that Congress currently does not like – no matter how old, or how much reliance has been placed upon it, or how important to the public health and safety – could face repeal. Think of the worker protections, healthcare notices, environmental rules, civil rights guidance that could be on the chopping block now that Republicans in Congress have secured this “win”.