Warren, Brown press consumer bureau on auto lending oversight

Warren, Brown press consumer bureau on auto lending oversight

Sens. Elizabeth WarrenElizabeth WarrenThe Memo: Trump ratchets up Twitter turmoil Hillicon Valley: Twitter flags Trump tweet for 'glorifying violence' | Cruz calls for criminal investigation into Twitter over alleged sanctions violations | Senators urge FTC to investigate TikTok child privacy issues Warren condemns 'horrific' Trump tweet on Minneapolis protests, other senators chime in MORE (D-Mass.) and Sherrod BrownSherrod Campbell BrownHillicon Valley: Twitter flags Trump tweet for 'glorifying violence' | Cruz calls for criminal investigation into Twitter over alleged sanctions violations | Senators urge FTC to investigate TikTok child privacy issues Democratic senators urge regulators to investigate Instacart over 'tip baiting' Senate Dems press DOJ over coronavirus safety precautions in juvenile detention centers MORE (D-Ohio) asked the Consumer Financial Protection Bureau (CFPB) to step up oversight of the $1.3 trillion in auto loans held by Americans as the economy faces a deep slowdown due to the global coronavirus pandemic.

In a letter released by Warren and Brown on Tuesday, the Democrats asked CFPB Director Kathy Kraninger to detail how she and the bureau “will ensure the agency fulfills its mission of stopping abusive practices and protecting consumers from this emerging threat.”

“As financial markets have become increasingly unstable in recent weeks, it is more important than ever that this volatile debt market be closely monitored and regulated,” continued Warren, a member of the Senate Banking Committee, and Brown, the panel’s top Democrat.

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The CFPB is statutorily barred from overseeing, regulating or prosecuting auto dealers themselves, but can crack down on potential fair lending abuses by automakers and financial services firms offering auto loans.

In 2018, the GOP-controlled Congress and President TrumpDonald John TrumpDonald Trump and Joe Biden create different narratives for the election The hollowing out of the CDC Poll: Biden widens lead over Trump to 10 points MORE repealed a 2013 legal memo used by the CFPB to fine lenders and carmakers hundreds of millions of dollars for allegedly abusive dealer markups. The CFPB has not issued an enforcement action over auto lending practices since 2018, according to the senators, shortly after Trump appointed former acting Director Mick MulvaneyMick Mulvaney12 things to know today about coronavirus Mulvaney: 'We've overreacted a little bit' to coronavirus The Memo: Trump agenda rolls on amid pandemic MORE to lead the financial regulatory agency.

Warren and Brown expressed concerns that the structure of the auto loan market, the financial ties between dealers and auto lenders, and the increasing length of auto loans “allows for consumers to be exploited.”

The senators also cited reports of dealers inflating the income of an auto loan applicant to ensure they can receive a loan they likely cannot afford. 

“The CFPB has the power to make a difference in this market,” the senators wrote. “While the agency does not have the authority to examine directly the practices of auto dealers, it does have the authority — and the responsibility — to examine the auto lending companies and financial institutions that provide auto loans.”