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WASHINGTON, D.C. — As dealer associations reacted swiftly to
the Consumer Financial Protection Bureau's latest position on auto financing,
organizations representing banking and financial institutions as well as credit unions all saw problems in
the guidance, too.

American Financial Services Association president and chief
executive Chris Stinebert shared several concerns about the CFPB's first
bulletin directly specifically at auto financing.

"AFSA welcomes the CFPB's guidance on indirect auto lending
and compliance with the Equal Credit Opportunity Act. However, the bulletin
raises as many questions as it answers," Stinebert said after Thursday's agency
announcement.

"AFSA and its members do not tolerate discrimination, which
hurts consumers, the community and our industry. In light of the CFPB's
bulletin, AFSA will work with the CFPB for clarification of their remarks about
incentives and significant risks poses by dealer participation," he continued.

"Furthermore, AFSA will seek an explanation from the CFPB on
what tolerances, if any, are available to lenders under the discretionary
dealer participation model. This guidance has offered no alternatives beyond
moving to a flat fee, which CFPB has stated publicly has not worked in the
past," Stinebert went on to say.

"The CFPB clearly acknowledges the value that dealers
provide consumers through dealer arranged financing and that dealers deserve to
be reasonably compensated for their work," Stinebert added. "The practice of
dealer participation is time-tested and has kept the price of vehicle financing
affordable for all borrowers. The performance of auto loans is high and the
default rates are at historic lows.

Stinebert noted that AFSA intends to work with the CFPB for
a solution that "fairly treats consumers, protects their access to credit and
choice, and reasonably compensates dealers for the value they provide."

Similarly, Richard Hunt, the president and CEO of the Consumer
Bankers Association, questioned the methods the CFPB used to push regulatory
measures on the auto finance community.

"CBA and our members have a deep and abiding commitment to
fulfilling the financial needs of consumers and have zero tolerance for
discrimination," Hunt said. "This is a bedrock principle throughout the banking
industry across all products. We look forward to working with the CFPB and all
our regulators to ensure every consumer is protected. 

"Unfortunately, Congress dealt the American consumer a real
clunker by not guaranteeing all consumers are protected equally at all points
of purchase," Hunt added.

Hunt at the CBA likely saw first-hand what was coming in the
CFPB's bulletin. The association's conference last week in Phoenix had a
session that included CFPB assistant director of the installment and liquidity
lending group Richard Hackett and Patrice Ficklin, the agency's assistant
director of fair lending and equal opportunity.

The agency officials discussed the need for auto lenders to
monitor policies that allow discretion, such as dealer markups, for potential
discriminatory practices.

"Lenders should not assume they are liable only if they had
actual knowledge of the discrimination," Ficklin said.


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Fred Becker president and CEO of the National Association of
Federal Credit Unions, reacted to Thursday's bulletin announcement, as well.
Becker mentioned the association strongly advocates for fair lending but
cautioned that the guidance implies that the CFPB will seek to hold credit
unions accountable for others' actions.

Becker said it puts credit unions between dealers and the
CFPB, which has not received direct supervisory authority over dealers under
the Dodd-Frank Act.

"This essentially treats the auto dealer as a third-party
service provider of the credit union, increasing credit union's risk for
liability and giving the CFPB a way to reach auto dealers in the absence of
direct statutory authority," Becker said.


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Nick Zulovich can be reached at nzulovich@subprimenews.com. Continue the conversation with SubPrime Auto Finance News on LinkedIn and Twitter.