By on September 18, 2014

cfpb-consumer-financial-protection-bureau

New rules being announced by the Consumer Financial Protection Bureau would mean that the captive finance arms would be subject to oversight from the CFPB.

Automotive News reports that the CFPB will now have jurisdiction over “nonbank lenders” that  “make, acquire, or refinance 10,000 or more loans or leases in a year.” This rule would encompass virtually all captive finance arms, covering a total of 38 lenders that originate roughly 90 percent of nonbank auto loans and leases.

Until now, the CFPB has not defined its cutoff point for overseeing “larger participants”, which largely included financial institutions. But the new definition brings auto maker finance arms under the CFPBs umbrella, something which has been expected for some time.

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23 Comments on “Captives To Face CFPB Oversight...”


  • avatar
    28-Cars-Later

    Consumer Financial Protection Bureau: such an Orwellian name.

    “Automotive News reports that the CFPB will now have jurisdiction over “nonbank lenders” that “make, acquire, or refinance 10,000 or more loans or leases in a year.””

    So… who’s protecting consumer finances from the certified banksters?

    Serious question.

    • 0 avatar
      Astigmatism

      Um… the CFPB? I’m confused by this question.

      • 0 avatar
        28-Cars-Later

        If you read the Wikipedia page it specifically mentions mortgages, credit cars, and retirement accounts under “Regulatory activities”. However the basic definition states: “The Consumer Financial Protection Bureau (CFPB) is an independent agency of the United States government responsible for consumer protection in the financial sector. Its jurisdiction includes banks, credit unions, securities firms, payday lenders, mortgage-servicing operations, foreclosure relief services, debt collectors and other financial companies operating in the United States.”. So, do the regulate auto loans made through banks and if so why is this not stated under regulation?

        • 0 avatar
          dal20402

          Because you can’t always rely on Wikipedia to be word perfect. The CFPB regulates most consumer financial products, including bank loans. It has to share jurisdiction over banks (very uneasily) with traditional bank regulators such as the OCC, who have always been concerned much more with the bank’s financial picture than any consumer-facing issues.

    • 0 avatar
      ClutchCarGo

      What’s Orwellian about the name? For an organization set up to help protect consumers from exploitative and unscrupulous financial practices, the name seems on target.

      • 0 avatar
        28-Cars-Later

        I’m sure you realize it is human nature to exploit each other for financial gain. The best defense against this is an educated citizenry, not another alphabet agency to “protect” everyone. I also still think its an Orwellian name (Lender Oversight Agency works just as well) but we can agree to disagree.

      • 0 avatar

        Yea, CFPB protected “black” borrowers from Ally Bank for their dealers charging them a third of a percent higher interest than other borrowers. Now “Asian” buyers tend to get better interest rates than “whites.” But the CFPB doesn’t care about that. Further, they determined if a person is “black” by their surname and zip code.

        There’s a lot they could be doing other than “fixing something that ain’t broke.” They are determined to make an end run around Congress, who forbid CFPB from regulating new car dealers, by hassling their lenders. They charged ALLY about $100 million in fines and restitution at the time when ALLY absolutely had to get out from under the CFPB so they could structure themselves for their IPO. Can you spell E X T O R T I O N?

    • 0 avatar
      CJinSD

      I think I see your point. This agency was created to protect the interests of said banksters.

      • 0 avatar

        If that is the case they sure fought hard against it, and against Elizabeth Warren who championed it.

      • 0 avatar
        dal20402

        Actually, it was the first bank regulatory agency that *wasn’t* created to protect bankster interests. That’s why bank-friendly Senators tried every trick they could to prevent it from operating (and some are still arguing that it shouldn’t legally have any authority because its director wasn’t properly confirmed).

      • 0 avatar

        The agency was created to be the consumer’s watch dog. They are making banker’s lives miserable. They are trying to impose equal outcomes without saying so. The banking system NEEDS proper regulation. It NEEDED the Community Reinvestment Act. It needs reserve regulation. But it isn’t credit union and traditional depository banks that caused the mortgage crisis, which some get confused with auto lending. It is TRUE that BOTH auto loans and mortgages get securitized. The dangerous element in lending are the credit derivatives. That’s where the regulation needs to focus. Instead, there are a bunch of empowered “do gooders” on witch hunts. There is no Congressional oversight of the CFPB. They are funded by the Federal Reserve. They have rule making authority without going to Congress. Worse yet, Director Cordray is “grand standing” before he resigns to run for the Governorship of Ohio. You heard it here first.

        • 0 avatar
          05lgt

          I want to trust the CFPB, because there was and is wrongdoing on the consumer facing side of lending as well as the securitization side. Sadly, what I read in the news and hear from you makes me think they’re actually (whether intentionally or because the organization is being effectively herded) just putting up a front to restore the essential level of trust in the system without actually allowing any reform of the higher level defectors who continue to glean an inappropriate and unsustainable fraction of the world economy’s production. I guess I shouldn’t believe that a government of Goldman Sachs and it’s cohort would ever stop the flow of money and power to their own mouths. Ruggles, restore my faith in the economy. Please.

          • 0 avatar

            I chastise my fellow sinners regularly for creating situations that results in over reach. ‘ll take the CFPB, with all of its flaws, over unregulated Wall Street in a heartbeat.

            I am concerned when bankers are castigated as a general group. There is a HUGE difference between a local or regional depository bank and investment banks. There are bad actors in both places but the investment bankers have more “reach.” After all, it was their credit default swaps that allowed for the AAA rating of the mortgage backed securities that melted down the world’s economy. It was RW thinkers who blocked needed regulation. Now we have raving lunatic liberals trying to mandate equal results for everyone. The pendulum continues to swing, but we have about $50 trillion in credit default swap contracts in place with NO RESERVES in place to pay claims, other than the net worth of the issuers.

  • avatar
    greaseyknight

    I’ve looked over, learned about the CFPB Guidelines for mortgages and such, and IMHO they are mostly a waste of paper. Alot of good/helpful idea, that are very confusing, so many days this, so many days that, and this coming from a lawyer. The big problem is that they do not have any real consequences for not following the guidelines. Maybe in the big picture, but there’s nothing like “You messed up a loan mod, so you get fined for it” or something like that.

  • avatar
    highdesertcat

    After reading all the comments here re the CFPB, I was compelled to add my 2-cents.

    My perspective is a little different because I think that the CFPB does nothing to protect the lenders from borrowers who willfully and often fraudulently overstate their assets and income in order to get a loan for whatever, but then are the first to holler and scream that they’ve been financially raped or otherwise wronged by the lender.

    The concept of the CFPB may be sound, but the practical application of the concept can often result in a lender being punished for something that the borrowers readily agreed to beforehand in order to get that loan.

    Caveat Emptor, yet no recourse against borrowers who cannot repay their debts.

    • 0 avatar

      Lenders these days are quite sophisticated. They don’t just accept one’s “word” for income. They can request pay stubs and tax returns, as well as proof of any other claimed income. Of course, if the LTV is advantageous, and the borrower has a strong credit score, income verification isn’t a big deal. It is quite common for a lender to “approve” a deal via the dealer with a host of “stips” attached. (Stipulations)i.e. The bank “approves” the deal with an extra $2k down, 3 years of tax returns, and 6 months current pay stubs to get to a tier 3 interest rate. Credit Applications aren’t either approved or turned down. They are 95% approved under some set of “stips.” If you’re a complete “credit criminal,” known in the South as a “bogue,” you probably don’t have a job and have never paid attention, let alone paid payments on any loan. You still won’t be turned down. You’ll be directed to a car you can buy for 50% down.

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