GOP Lawmakers Aim To Roll Back Regs Using Old Law In A New Way
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Republican lawmakers are expected this week to overturn a rule that aims to prevent racial discrimination by automobile lenders. This move is part of a broader effort by the GOP to roll back potentially hundreds of other regulations by using an old law in a new way. NPR's Chris Arnold reports.
CHRIS ARNOLD, BYLINE: When you go to buy a car, you can get a loan through the dealership, but not everybody with the same credit score gets the same rate. Rebecca Borne is with the Center for Responsible Lending. She says studies have found racial discrimination here.
REBECCA BORNE: Just this year, a new study was released. The study sent testers out and found that - most of the time - the borrower of color got a worse deal than the white borrower even though the borrower of color had a higher credit score.
ARNOLD: The Consumer Financial Protection Bureau studied the issue and found discrimination as well. So five years ago, the Consumer Bureau put the industry on notice. It issued what's called regulatory guidance for auto lenders. That means it said, basically, here's what you have to do to abide by the law. But the industry didn't like that. It said both the studies and the remedies are flawed. David Regan is with the National Automobile Dealers Association.
DAVID REGAN: The agency really failed to look at legitimate business factors that can and are used in dealerships to discount financing.
ARNOLD: OK, so let's take a particular car. Why not David Regan's car?
REGAN: I drive a Nissan Murano.
ARNOLD: Let's say a dealer has a Murano. It's a bright orange one, and it's just not selling. The dealer could say, look, please, I'll give you a deal - a nice low interest rate. Just buy the Murano.
REGAN: Right. Dealers often provide discounts on financing to help close the sale on a specific vehicle that they want to move off the lot as soon as possible.
ARNOLD: Regan says the Consumer Protection Bureau is telling auto lenders, though, it's not OK anymore for dealers to do that - to have that flexibility.
REGAN: The intent of the guidance was to eliminate discounts in financing that were discretionary.
ARNOLD: Rebecca Borne says that's not true. The guidance says dealers can offer discretionary pricing so long as the lender takes steps to detect and prevent discrimination. Regan says, though, that's too burdensome. And he's happy that it looks like Congress will vote to scrap this rule. It's doing that using what's called the Congressional Review Act. Now, that had just been this old obscure law from 20 years ago. But since President Trump took office, Republicans in Congress only need a simple majority vote to use it like a regulation-cutting chainsaw. Republican Roy Blunt tallied this up on the Senate floor in April.
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ROY BLUNT: That act had been used exactly one time in the entire life of the law. And we were able to look at it and use it 15 times last year to eliminate rules that would've cost our economy $36 billion in compliance costs.
ARNOLD: Those were all new regulations. The auto lending rule, though, will be the first time the Review Act has been used to go after an older regulation. Rebecca Borne says many nonprofit organizations like hers are now warning that hundreds of more established rules and protections that they thought were safe could be on the chopping block.
BORNE: Environmental groups are concerned. Civil rights groups, women's groups - all of us are very concerned that years of really important federal policy could be undone way too easily this way.
ARNOLD: It won't be that easy, though. Congress would have to engage in hours of debate to undo each rule, and Republicans have competing priorities. But rules that do get overturned could be gone for good. Chris Arnold, NPR News.
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