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Trump Signs into Law Toomey-Moran Bill Repealing Obama-Era Auto Lending Rule

Trump Signs into Law Toomey-Moran Bill Repealing Obama-Era Auto Lending Rule

WASHINGTON, D.C. — On Monday, President Donald Trump signed into law a measure authored by U.S. Senators Pat Toomey (R-Pa.) and Jerry Moran (R-Kan.) repealing an improper regulation produced by the Obama-era Consumer Financial Protection Bureau (CFPB) governing “indirect auto lending.”

Senators Toomey and Moran used the Congressional Review Act (CRA) to eliminate a 2013 CFPB overstep on “indirect auto loans,” which is financing offered to a car buyer through an automobile dealer instead of directly from a consumer’s bank or credit union. In the 2010 Dodd-Frank financial reform law creating the CFPB, Congress specifically prohibited the new agency from regulating auto dealers. However, in 2013 the CFPB found a way around the ban. Without going through the customary rulemaking and public input processes, the CFPB published a flawed guidance document that threatened auto dealers’ ability to negotiate the terms of these loans with their customers and was used to sanction auto financing companies. In 2015, the House of Representatives passed a bill, with 88 Democrat votes, to repeal the so-called “bulletin,” but further action wasn’t taken in the Senate before the 114th session of Congress expired.

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Last year at the request of Sen. Toomey, the Government Accountability Office (GAO) reviewed the CFPB’s guidance and concluded that it qualified as a rule under the CRA, thereby making the bulletin eligible to be rolled back by simple majority vote in Congress. To ensure agencies adhere to congressional intent, the CRA requires any rule to be transmitted to Congress for review. The CFPB never satisfied this statutory requirement despite the significant ramifications of a back-door regulation aimed at auto dealers.

“Throughout his tenure at the CFPB, Richard Cordray routinely thumbed his nose at the public and Congress by overstepping his authority,” said Senator Toomey. “This auto lending guidance is a clear example of this. I’m pleased that the GAO understood that this guidance was, in fact, a rule and that both the House and Senate used the CRA to roll it back.”

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Auto dealers from across Pennsylvania supported the Toomey-Moran legislation. The Senate used the CRA to eliminate this guidance on April 18, 2018 and the House did the same on May 8, 2018. President Trump and Congress have now used the CRA 16 times to cut onerous Obama-era rules.

Source: Pat Toomey, U.S. Senator for Pennsylvania

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