US: legislators to further regulate auto lending image

The automotive sales surge has been partially funded through very cheap financial aids, but the Obama administration has now proposed new legislation to regulate auto lending after finding that some customers were mistreated.

For the first time the US government aims to introduce federal oversight for big auto finance companies because they uncovered evidence that some minority buyers that had car loans at major banks were discriminated.

The oversight legislations would affect 38 large non-bank auto lenders, including the captive finance units of automakers such as Ford, Toyota, Honda, Volkswagen and Nissan. The Consumer Financial Protection Bureau did not give a full list of the 38 companies, but said that among the 530 non-bank auto lenders its legislation would only cover those who make at least 10,000 auto loans or leases annually.

“We took action after we uncovered auto-lending discrimination at banks we supervise. Today’s proposal would extend our oversight, allowing us to root out discrimination and ensure consumers are being treated fairly across this market,” said CFPB Director Richard Cordray.

The new legislation only affects large non-bank entities because finance businesses operated through a bank or bank holding are already supervised by the CFPB, the Federal Reserve Board and other regulators.

Via Detroit News