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THE CARLAWYER

The CARLAWYER ©

By Thomas B. Hudson and Nicole F. Munro
In November, President Trump left a brand- later, the judge denied English’s request for a Ombudsman’s Office released its annual
new pro-industry Consumer Financial temporary restraining order, and has not yet report. The report describes how the Office
Protection Bureau Director under the auto issued a decision on the merits of English’s can assist consumers, financial institutions,
finance and lease industry’s Christmas tree. claim that she has the authority to serve as and others with a question, concern, or
This should make for an interesting 2018 acting CFPB director. Stay tuned. complaint regarding a CFPB process.
for all of us. This month, we also report
on activities of the House and Senate, Blocking Another CFPB Rule? On Federal Reserve Board Does Some Rule
the Federal Reserve Board, the Federal December 1, a group of House Democrats Housekeeping. On December 18, the FRB
Trade Commission, the Government and Republicans introduced a bill to block proposed a rule that would revise its Reg. M,
Accountability Office, the Department the CFPB’s so-called “small dollar rule” issued to implement the Consumer Leasing
of Defense and the Consumer Financial (regulating payday and title loans, among Act. Before the enactment of the Dodd-
Protection Bureau. As usual, this month’s others) from going into effect. The proposed Frank Act, the CLA was implemented
article features our “Case of the Month.” legislation exercises authority under the solely by the Board’s Reg. M, which applied
Congressional Review Act to prevent the to all types of lessors. The DFA transferred
Note that this column does not offer legal rule from becoming effective on January 16. rulemaking authority for the CLA to the
advice. Always check with your lawyer to The CRA provides a procedure by which CFPB; however, the FRB retains authority
learn how what we report might apply to Congress can disapprove of rules issued by under the CLA to issue rules applicable
you, or if you have questions. federal agencies within 60 legislative days to dealers exempt from CFPB rulemaking
of such rules being submitted to Congress jurisdiction. The FRB is proposing to revise
This Month’s CARLAWYER for review. If both the House and the Senate its Reg. M and its accompanying Official
©
Compliance Tip vote to disapprove a rule, the agency may not Staff Commentary to reflect this change.
issue any rule in substantially the same form Comments on the proposed rule are due
Check out the Department of Defense item in the future. Earlier this year, Congress within 60 days after publication in the
below. If you sell and finance cars to military used its CRA authority to block the CFPB’s Federal Register.
personnel, including military dependents, arbitration rule. Remember the late-night
you need to get some quick schooling on what tiebreaker vote by Vice President Pence? Atten-Hut! On December 11, the
the DOD says is permitted and not permitted Department of Defense released an
in connection with those transactions. You’ll CFPB Bulletin Deemed to be a “Rule,” and interpretive rule for the Military Lending Act
likely need your lawyer’s help on this one. Invalid. On December 5, the Government to provide additional guidance to industry
Also, you should contact your consumer Accountability Office opined that the regarding compliance with its July 2015 final
reporting agency about how to obtain MLA CFPB’s March 2013 bulletin on auto finance rule amending the MLA’s implementing
covered borrower status or get to know the and compliance with the Equal Credit regulation. The July 2015 rule amended the
Department of Defense’s website at https:// Opportunity Act constitutes a “rule” subject regulation to extend MLA protections to a
mla.dmdc.osd.mil/mla/#/home. to the Congressional Review Act. Because broader range of closed-end and open-end
the CFPB did not submit the bulletin for credit products. In August 2016, the DOD
Federal Developments review, the 60-day review period never issued a Q&A interpretive rule to help
began to run and the bulletin is considered industry comply with the July 2015 rule. The
CFPB Leadership Shakeup. On November not yet effective. The controversial bulletin current amendments to the interpretive rule
24, Richard Cordray resigned as CFPB provided detailed expectations about steps provide new Q&As in an effort to provide
Director and appointed his chief of staff, indirect auto creditors must take to monitor additional guidance concerning compliance
Leandra English, to become deputy director. differences in average retail and wholesale with the July 2015 rule, but raise serious
A few hours later, President Trump appointed interest rates (so-called “markups”) between questions regarding the sale and financing
Mick Mulvaney, the director of the Office of protected groups and non-protected groups of ancillary products.
Management and Budget, as acting director under the ECOA. The bulletin also detailed
of the Bureau until the Senate confirms a the Bureau’s expectations for corrective Case of the Month
permanent director, setting up a conflict action when a creditor identifies disparities
with Cordray’s appointee. English then sued for individual dealers or within its portfolio In what actually is not a case, but an
Mulvaney and the president in federal court, as a whole. important enforcement action, Cowboy
asking the court to restrain Mulvaney from AG, LLC, a Texas buy-here, pay-here dealer
heading the Bureau until a permanent director How Can the CFPB’s Ombudsman doing business as Cowboy Toyota and
can be nominated and confirmed. Two days Help You? On December 6, the CFPB’s Continued on page 38

36 | GIADA Independent Auto Dealer JANUARY 2018