Normal
0
false
false
false
EN-US
X-NONE
X-NONE
HANOVER, Md., and WASHINGTON, D.C. — As auto finance
companies continue to watch for new rules and regulations orchestrated and enforced
by the Consumer Financial Protection Bureau, at least they know President Barack Obama
wants to keep the agency's director in place.

About a week after the National Auto Finance Association
conducted an informal gathering where CFPB mandates took center stage, Obama re-nominated
Richard Cordray to remain director of the agency created by the Dodd-Frank Act
of 2010.

In remarks when making the announcement on Thursday
afternoon, the President said, "There are rules to help families — responsible
families buy a home or send their child to college without worrying about being
tricked out of their life savings. There
are rules to make sure that financial firms which do the right thing aren't
undermined by those that don't do the right thing.  And there are rules to end taxpayer-funded
Wall Street bailouts once and for all. 

"A year and a half ago, I nominated Richard Cordray to lead
the watchdog agency we created to give Americans the information they need to
make sound financial choices and protect them from unscrupulous lenders and
debt collectors," the president continued.

"Through it all, Richard has earned a reputation as a
straight shooter and somebody who's willing to bring every voice to the table
in order to do what's right for consumers and our economy," Obama went on to
say.

Cordray arrived at the CFPB after serving as Ohio's attorney
general.

"Thank you, Mr. President, for the confidence you have
placed in me and our team at the Consumer Financial Protection Bureau," Cordray
said in a statement. "We understand that our mission is to stand on the side of
consumers — our mothers and fathers, sisters and brothers, sons and daughters —
and see that they're treated fairly.

"For more than a year, we have been focused on making
consumer finance markets work better for the American people. We approach this
work with open minds, open ears, and great determination. We all thank you and
the Congress for the opportunity and the honor to serve our country in this
important way. Thank you," he went on to say.

Before Obama made his announcements at the White House, some
the market's leading auto lenders gathered in the Lone Star State to discuss
what the CFPB already has mentioned as well as what might be coming later this
year and beyond

NAF Association executive director Jack Tracey attended a
lunch meeting organized by Dallas-area business development consultant Becky
Igo to discuss a bulletin the CFPB issued last April that had to do with
service providers that offer their expertise to lenders. Tracey thought only a
handful might arrive. Turns out close to 40 executives wanted to talk about
what might be coming from the CFPB in terms of service provider compliance.

Tracey indicated executives from area credit unions and
smaller finance companies came along with management from who he called "the
big guys," operations including Ally Financial, General Motors Financial,
Santander Consumer USA, Wells Fargo, Nissan Motor Acceptance, and Exeter
Finance.

"The level of concern is demonstrated by the number of
people that showed up," Tracey said. "It just shows that across the spectrum of
finance companies, everyone is concerned about the compliance and they're
trying to comply."

That CFPB bulletin listed several points in what agency
officials deemed to be "expectations" of service providers that assist lenders
in remaining compliant. Those points included:

—Conducting thorough due diligence to verify that the
service provider understands and is capable of complying with federal consumer
finance law.

—Requesting and reviewing the service provider's policies,
procedures internal controls and training materials to ensure that the service
provider conducts appropriate training and oversight of employees or agents
that have consumer contact or compliance responsibilities.

—Including the in the contract with the service provider,
clear expectations about compliance as well as appropriate and enforceable
consequences  for violating any
compliance-related responsibilities, including engaging in unfair, deceptive or
abusive acts or practices.

—Establishing internal controls and on-going monitoring to
determine whether the service provider is complying with federal consumer
finance law.

—Taking prompt action to address fully any problems
identified through the monitoring process, including terminating the
relationship where appropriate.

"It's to assure the contractor is performing in the way they
say they will in the contract. One way to it is with auditing. But some of these
companies have an awful lot of service providers," Tracey said. "It's a bit
daunting to see how much onsite auditing would have to be done to ensure the
vendor is doing what he says he's supposed to do.

"I would say this opens a market for the vendor community
itself to expand what they do and provide some of these auditing services. Perhaps, these could be
companies independent of the vendor that's being audited. That way it can assure they're
doing what they're supposed to be doing," he continued.

The NAF Association's informal gathering came soon after the
organization conducted an official roundtable focused on compliance featuring
Hudson Cook partners Tom Hudson and Patty Covington. SubPrime Auto Finance News
published a recap of that January event here.

Tracey said all of the participants at each of the events
NAF Association has been a part of are eager to learn about what specific
guidelines the CFPB outlines. The agency recently spelled out several
regulations pertaining to the mortgage industry, announcements that can be
found here.

"One of the things it would be good if the CFPB would come
up with specifics on how (finance companies) are expected to comply," Tracey
said. "The association might be able to establish some best practices, but the
association isn't able to do that any more than the finance companies are. But
we're working at it that at some point in the future we can provide some
guidance. We have to see how this is going to play out a little bit before we
can do that."

Tracey reiterated that the dialogue he had so far during the
first month of this year is greatly helping him construct the agenda for the
NAF Association's 17th annual Non-Prime Auto Financing Conference June 5—7 in Fort Worth, Texas.

"So many of the auto finance conferences have the same
programming and topics addressed, I'd like to drill down a little bit and get
more specific because the members have grown to expect it," Tracey said. "At
least there are issues out there that are more easily identified so that
drilling down is easier than it has been in other years. The CFPB is providing
lots of ways to build a program."

Reaction to Cordray Nomination

Richard Hunt, president and chief executive officer of the
Consumer Bankers Association, used a sports analogy to convey his reaction to
the re-nomination of Cordray as director of the CFPB.

"For the past two years, the CFPB has been a political
football in part due to its flawed structure," Hunt said. "This is the perfect
opportunity for Congress to replace a sole director with a commission. This has
been the preferred approach to leadership structures at independent regulatory
agencies for the past 150 years, as it provides for a balanced and deliberate
approach to supervision and enforcement and offers certainty for consumers and
the industry.

"As a reminder, then-House Speaker Nancy Pelosi and
then-House Financial Services Chairman Barney Frank led passage of legislation
which would have created a five-member commission to oversee the CFPB," Hunt
continued. "In addition, then-professor Elizabeth Warren, the creator of the
CFPB, repeatedly called for a Financial Product Safety Commission during the
debate.

Warren, now a U.S. Senator representing Massachusetts,
cheered Obama's decision.

"I am very pleased that the President has decided to
re-nominate Rich Cordray as director of the Consumer Financial Protection
Bureau. I worked with Rich to set up the agency and believe he is a strong
leader with a proven track record of fighting for consumers and pushing for a
level playing field between big banks and smaller financial institutions like
community banks and credit unions," said Warren, a Democrat.

"The CFPB has had an extraordinary first year and a half —
holding credit card companies accountable for cheating consumers and adopting
the first set of rules to clean up the mortgage market. Senate confirmation of
Rich's nomination will continue this momentum, benefitting families,
establishing certainty, and safeguarding the economy as a whole from reckless and
dangerous consumer lending," she went on to say.

That confirmation could ignite more debate the CFPB on
Capitol Hill if the reaction from one Republican Senator is any indication. Idaho
Senator Mike Crapo is expected to be one of the ranking Republicans on the committee
on Banking, Housing and Urban Affairs.

"The decision to re-nominate Richard Cordray to be director
of the Consumer Financial Protection Bureau after using an unconstitutional
recess appointment is premature, given the outstanding concerns about the
bureau and the legal challenge to the recess appointment," Crapo said.

"Until key structural changes are made to the bureau to
ensure accountability and transparency, I will continue my opposition to any
nominee for director, as outlined in a letter signed by 45 Republican Senators
to the president," Crapo went on to say. "If the president is looking for a
different outcome, the administration should use this as an opportunity to work
with us on the critical reforms we have identified to him."

Meanwhile, Obama urged the Senate not to delay a
confirmation of Cordray.

"Richard's appointment runs out at the end of the year, and
he can't stay on the job unless the Senate finally gives him the vote that he
deserves," Obama said. "Financial institutions have plenty of lobbyists looking
out for their interests. The American people need Richard to keep standing up
for them.  And there's absolutely no
excuse for the Senate to wait any longer to confirm him."

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


/* Style Definitions */
table.MsoNormalTable
{mso-style-name:”Table Normal”;
mso-tstyle-rowband-size:0;
mso-tstyle-colband-size:0;
mso-style-noshow:yes;
mso-style-priority:99;
mso-style-qformat:yes;
mso-style-parent:””;
mso-padding-alt:0in 5.4pt 0in 5.4pt;
mso-para-margin-top:0in;
mso-para-margin-right:0in;
mso-para-margin-bottom:10.0pt;
mso-para-margin-left:0in;
line-height:115%;
mso-pagination:widow-orphan;
font-size:11.0pt;
font-family:”Calibri”,”sans-serif”;
mso-ascii-font-family:Calibri;
mso-ascii-theme-font:minor-latin;
mso-fareast-font-family:”Times New Roman”;
mso-fareast-theme-font:minor-fareast;
mso-hansi-font-family:Calibri;
mso-hansi-theme-font:minor-latin;}