WASHINGTON, D.C. — As the agency's investigations within the
auto lending space deepen, the ongoing clash about whether Richard Cordray will
remain director of the Consumer Financial Protection Bureau will continue next
week. The U.S. Senate Committee on Banking, Housing and Urban Affairs will
conduct a hearing about Cordray's nomination on Tuesday.

During the same session, the committee also will consider if
Mary Jo White should lead the Securities and Exchange Commission.

While President Obama emphasized back in January why Cordray
should remain in his position, Senate Republicans are critical of keeping him
in the role, especially in light of a U.S. Circuit Court of Appeals decision
some legal experts believe could make the president's initial recess
appointment of the CFPB leader unconstitutional.

The CFPB's examination of the auto finance industry is
intensifying. Ally Financial confirmed in its annual report to the SEC that's it's
being investigated by the bureau.

"The CFPB has recently advised us that they are
investigating certain of our retail financing practices," Ally officials said
in its SEC filing posted last Friday. "These matters, or any other
investigation or information-gathering request, may result in material adverse
consequences including without limitation, adverse judgments, settlements,
fines, penalties, injunctions or other actions."

Last month, Bloomberg reported that the CFPB has told at
least four banks that it may sue them over vehicle loans and interest-rate
markups by dealers that appear discriminatory, according to three people
familiar with the matter.

The report quoted Cordray from a
conference call with credit unions on Feb. 5 saying. "Auto lending is within
our jurisdiction."

Without referencing any enforcement plans, Cordray added, "We
are examining institutions around auto lending just as we are looking at them
on mortgage, credit cards, student loans."

And this week, the National Automobile Dealers Association
issued another statement reiterating its stance on the importance of what goes
on in the F&I department, especially if the CFPB pushes lenders to reduce
the allowable finance reserve further or move to a flat fee, which many finance
companies have done.

"Dealership finance offices provide a valuable service that
increases access and reduces the cost of credit to consumers. The dealer's
ability to discount the interest rate that it offers to consumers, which is
made possible by the customer's ability to negotiate that rate at the dealership,
would be eliminated if agency action leads to an arbitrary flat fee
compensation system," NADA said.

"Removing the dealer's ability to ‘meet or beat' the best
interest rate that is available to a customer from other finance sources would
significantly weaken rate competition and result in more expensive financing
for consumers," the association continued. "The CFPB's reported investigations
do not involve unfair treatment of individuals, but rather consist of an
after-the-fact statistical analysis of whether one group paid more for credit
than another group.

"It is therefore essential that this analysis be conducted
in a statistically reliable manner; otherwise it can produce flawed findings
that could serve as a springboard for disrupting the optional dealer-assisted
financing system that has served consumers at all credit tiers extraordinarily
well," NADA went on to say.


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