It's too bad that the head of the Consumer Financial Protection Bureau, which prides itself on enforcing transparency in the finance industry, is opaque about its plans for the auto-lending segment.
Apparently, auto lenders and the franchised, new-car dealers they do business with are just going to have to wait and see, even though that's not the answer anybody wants.
At last week's Consumer Bankers Association convention in Texas, Richard Cordray, CFPB director, stuck to his prepared remarks. He didn't even mention the word "auto," although he did mention mortgages, credit cards, student loans and checking accounts.
The Consumer Financial Protection Bureau hasn't gotten around yet to any specific public statements on auto lending. That has done nothing to calm high anxiety among auto lenders and dealers about whether the bureau or other government regulators, such as the Federal Trade Commission, will review the common practice of dealer reserve on indirect auto loans.That's where dealers in effect mark up the customer's interest rate and share in the profits.
As Cordray headed for the exit at the convention, I asked him whether he could talk about the auto sector in general or specifically about dealer reserve. "I respect your right to ask," he said, "but I don't have any news to make on that today."
To be fair, the bureau is still new, and Cordray is newer still, having been appointed in January. Moreover, when the bureau was created in 2010, dealerships were specifically carved out of its jurisdiction. That potentially complicates any rules the bureau might contemplate regarding dealer reserve. Technically, any rules would be for lenders, not dealers.
Still, it was a disappointing appearance for anybody hoping for more details.