On Monday, May 21, President Trump signed a congressional resolution which rolled back Obama-era Consumer Financial Protection Bureau (CFPB) guidance used prohibit racial discrimination by financial lenders that finance automobile purchases.
Praising Mr. Trump’s signature on the resolution, acting CFPB Director Mick Mulvaney said overturning the informal rule was necessary to place curbs on the agency’s overreach.
“As an executive agency, we are bound to enforce the law as written, not as we may wish it to be. In this case, the initiative that the previous leadership at the bureau pursued seemed like a solution in search of a problem,” Mulvaney added.
Under the same congressional resolution, the CFPB will be unable to authorize a comparable rule without congressional approval.
Commenting on the overturning of the rule, House Financial Services Committee Chairman Rep. Jeb Hensarling (R-Texas) said:
“It is the Bureau’s job to enforce law, not make it. That is Congress’s job. I’m glad Acting Director Mulvaney recognizes this, and I look forward to continuing to work with him to repair the damage to the rule of law and the trampling of due process done by his predecessor.”
Originally adopted by the Obama White House in 2013, the rule set consumer protections on short-term, high-interest loans. Lenders were required through threat of federal lawsuit to confirm a borrower’s means to repay auto loans prior to approval.
The rule also prohibited banks and credit institutions from forcing customers into mediation contracts which barred customers from becoming a party to class-action lawsuits.
Acting under the Congressional Review Act, a law which grants Congress the authority to review regulations issued by federal agencies, both houses of Congress adopted the measure largely along party lines.
In the House earlier in May, it was approved 234–175; the Senate approved the motion 51–47 last month.[Financial Regulation News] [The Hill] [Photo courtesy Spencer Platt/Getty Images via NPR]