On May 8, 2018, the House of Representatives approved S.J. Res. 57 by a 234-175 vote. The Senate narrowly passed the same proposal approximately three weeks earlier on April 18 by a vote of 51-47. The resolution disapproves of a 2013 guidance document on indirect auto loans issued by the Consumer Financial Protection Bureau (CFPB). President Trump signed the joint resolution into law on May 21, 2018, as expected. This congressional action marks the first time the Congressional Review Act (CRA) has been used to target a guidance issued well before the CRA’s usual 60-day window.
The CFPB’s vehicle finance lending policy, issued through guidance rather than formal rulemaking, has directed fundamental market changes to the already heavily federal and state regulated auto lending industry. Such guidance is typically issued without transparency, public comment or consultation with other federal agencies.
Provisions of the 2010 Dodd-Frank Act barred the CFPB from having any oversight authority over automobile dealers. Despite this, the CFPB issued a March 2013 bulletin detailing potential enforcement actions against third-party lenders for violations of the Equal Credit Opportunity Act (ECOA). The guidance recommended that lenders should eliminate or control markup policies that increase the risk of racial discrimination.
In December 2017, Senator Pat Toomey (R-Pa.) released an opinion that this 2013 guidance constituted a rule and was therefore subject to the CRA. What followed was quick action by Republican Senators to formulate and propose a CRA resolution targeting the 2013 guidance. In October 2017, after studying the issue at the request of Sen. Toomey, the GAO found that the 2013 interagency guidance on leveraged lending issued jointly by the Federal Reserve, FDIC and the Office of the Comptroller of the Currency (OCC) constituted a “rule” for purposes of the Congressional Review Act.
The CRA normally gives Congress 60 legislative session days from a rule’s issuance to consider its repeal. The measures passed by Congress in early 2017 under the CRA were within this 60-day timeline. However, the action that starts this 60-day window is an agency’s filing and submission of a required report containing the text of the rule to Congress and the General Accounting Office (GAO). As agencies typically do not consider guidance documents to be “rules,” they usually do not file these reports. Thus, the 60-day clock is considered to start with the publication in the Federal Register of a GAO opinion that finds that a specific guidance bulletin is the effective equivalent of a rule.
Senate Banking Committee Ranking Member Sherrod Brown (D-OH) said the measure could “permanently weaken federal anti-discrimination laws, by preventing the Consumer Bureau from providing guidance on how fair lending laws should be applied in the future in this area.” Brown also stated that because the measure targeted a guidance issued well before the CRA’s usual 60-day time horizon, it could set a precedent for Congress “to interfere with thousands more federal decisions, potentially going back more than two decades.”
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