The House of Representatives has passed a bill that would limit the U.S. Consumer Financial Protection Bureau’s 2013 auto lending guidance. That guidance notes that lenders either need to impose limits on or eliminate dealerships’ abilities to adjust, on a case-by-case basis, the amount of compensation they keep for arranging a consumer auto loan (known as a dealer reserve). So who then should these "powers" be bestowed upon? The Obama administration seems to prefer the CFPB maintain it's hold on lenders in these cases, as a means to avoid pricing discrimination. No one party should have the full "big brother" authority, but it doesn't seem that regulators are drawing up a smart and better way to help consumer lenders anytime soon.
H.R. 1737 — the Reforming CFPB Indirect Auto Financing Guidance Act — would basically revoke the guidance. Congress argues that the rule is a backdoor attempt for the CFPB to grab power over auto lending that it was statutorily denied, as dealer reserves are put onto loans by auto dealers, not auto lenders. The CFPB has no power over auto dealers — such power is explicitly denied to it — and so the rules essentially use the CFPB’s ability to fine a lender to leverage the lender into pressuring the dealers to drop the reserves. The bill, however, has a long road to becoming law. It is unclear if the Senate will upvote the bill, and even if it does, President Obama will more likely than not veto it, since his opposition to it is well-known.