Santander Consumer USA SEC Filing Reveals CFPB, DOJ Interactions

The Consumer Financial Protection Bureau notified Santander Consumer USA that they may have acquired racially biased auto loans. In an August 10^th filing, SDUSA acknowledged that the CFPB had referred them to the U.S. Department of Justice over …”certain alleged violations by the Company of the Equal Credit Opportunity Act regarding statistical disparities in markups charged by automobile dealers to protected groups on loans originated by those dealers and purchased by the Company.” For the CFPB, interest in automotive has grown steadily since the organization was created back in 2010.

The CFBP isn’t supposed to regulate dealers. However, the financial regulatory agency has seemed determined to impact dealers by going after the lenders that they work with. This topic was brought to light in April of 2015, when U.S. Senator Elizabeth Warren, (D-MA) targeted car dealers in a speech at the Levy Economics Institute of Bard College. We reported previously that Warren used numbers that were at best fuzzy as they relate to today’s situation. Her figures actually only came from a small subsection of the subprime auto loan market from a 2011 report that gathered incomplete and non-exhaustive data from 2009 numbers. In her speech Warren claimed that dealerships cost consumers $26 billion per year. While her numbers were not accurate as they pertain to her message, the question is why is she targeting dealers? If they did make money in the finance process, is she out to prevent businesses from making money? Where is she on cutting down the cost of the new iPhone? In a press release Peter Welch, President of NADA, spoke about how he feels that the government is the one going after consumers. Welch said in a statement, “Washington wants to limit consumer choice and deny Americans the ability to benefit from the discounted financing rates that are often available at their local dealerships. It doesn’t take a study or an expert to see how wrong that is.”

What are your thoughts on the CFPB? Why do you think that the CFPB seems bent on regulating dealership finance? The budget for the CFPB isn’t subject to congressional approval. For that very reason do you think that they will continue to expand their regulatory reach into automotive finance without fear of pushback?