For years, 4 letters have struck fear into the hearts of auto finance professionals:
That’s the Consumer Financial Protection Bureau, the government agency in charge of enforcing federal consumer protection laws in banking, lending, and other financial matters. Shortly after its creation in 2010, the CFPB launched an aggressive and at times controversial campaign against financial organizations throughout the United States. The Bureau became known among critics for “rulemaking through enforcement” and “pushing the envelope.”
Of all the CFPB’s targets, the auto finance community has perhaps had it the hardest. Auto finance laws are, in a word, complicated. Dealerships, and especially F&I departments, need to keep dozens of rules and regulations in mind at every moment and in every interaction with customers. Those rules and regs change constantly. Some statues have varied considerably over the years (hello, Military Lending Act) in terms of updates and legal interpretations, leaving dealers and lenders open to substantial, unpredictable risk.
Throughout it all, the CFPB has continued bringing down the proverbial hammer while at the same time going through a series of constant changes itself. Director Richard Cordray left the Bureau abruptly in 2017. His replacement, Mick Mulvaney, signalled an intention to overhaul operations (even changing the acronym to “BCFP” for a spell), but only kinda-sorta changed things. Just over a year later, Mulvaney was succeeded by Kathleen Kraninger.
Under Kraninger, the CFPB seems to have begun an evolution into a calmer, more collaborative industry regulator—one that strives to listen to the financial organizations it oversees. Earlier this year, the Bureau launched a series of symposia—the first of which dealt with the word “abusive” in the contentious statutory language of “unfair, deceptive, and abusive acts and practices.” Many members of the industry see this as a step in the right direction. Most people can agree that clarifying UDAAP is a good thing, regardless of where they stand politically.