Consumers want to buy cars but aren't sure who is on their side when it comes to auto loans (illustrated)
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If you need to buy a car, hopefully you can do it without an auto loan.

Not only is it one of the more expensive ways to grab a set of wheels, but the laws and regulations surrounding them are getting murkier — and it’s not clear who will have your back if you get ripped off.

Both the Consumer Financial Protection Bureau and Congress should be looking out for consumers, regardless of which party is in charge. But both have been pretty confusing lately. The CFPB has eased up on regulations since Trump got to replace Obama appointee Richard Cordray at the end of last year, but has shown a new and surprising emphasis on debt collection enforcement.

Congress, well: They barely managed to pass the tax law last year after dithering all of 2017, they’re easing regulations on credit bureaus, just barely passed a budget they didn’t read for a fiscal year that’s now almost over, and aren’t likely to accomplish much else until after the midterm elections. But it sure looks like they want to roll back consumer protections for minorities on auto loans — whenever they get around to it.

CFPB issues record fine for sketchy auto loans

Late last month, the now Trump-run CFPB did something the Obama-run CFPB definitely wanted: hit Wells Fargo with an enormous $1 billion fine for its mortgage and auto loan business. The auto loans, in particular, were a problem from October 2005 until September 2016, according to the CFPB.

Basically, Wells Fargo was forcing millions of people to pay for extra insurance they didn’t need, and those who didn’t pay — even if they already had adequate car insurance — were subject to late fees, loan default, and even getting their cars repossessed.

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The bank even admits as many as 27,000 people may have had their cars repossessed over this stupidity. This, of course, is a strong case for the CFPB to exist (it didn’t when this started) and have the power to take action — nobody else was doing anything about this abuse over the past decade. All the people affected will end up getting money back for this, thanks to the CFPB.

Congress makes auto loans riskier for minorities

Meanwhile, Congress is busy trying to strip the CFPB of some of its newly proven regulatory power on auto loans.

The Senate has voted for a bill that would kill anti-discrimination rules for auto dealers, using the tired old excuse that it’s “unfair” to the businesses — you know, the ones that have lots of money and lobbyists and sell cars for a living instead of needing a car to make a living. Now that bill will go to the House, where Republicans have even firmer control.

The rules they want to tear up are documented here. The initial rationale for them, from former CFPB director Richard Cordray, was that “consumers should not have to pay more for a car loan simply based on their race.”

It saw evidence that was happening in 2013, and asserted that existing laws which “make it illegal for a creditor to discriminate in any aspect of a credit transaction on prohibited bases including race, color, religion, national origin, sex, marital status, and age” should be enforced upon auto lenders too. Congress isn’t trying to get rid of the existing law, it’s just saying the CFPB shouldn’t have any say in whether that law applies to auto loans.

It should be self-evident that it does. But unless somebody stands up to enforce existing laws — which is the proper role of a regulator, even by Republican standards — there isn’t much point in having them. And that’s what has often happened to consumers until the CFPB showed up.

It’s a weird situation: The CFPB, even with a Trump appointee, isn’t halting its enforcement efforts. But it has slowed down and changed direction, and now Congress seems intent on hemming the agency in further. In the near term, don’t expect much backup from the federal government on your auto loans.

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Article last modified on May 3, 2018. Published by Debt.com, LLC . Mobile users may also access the AMP Version: CFPB Fights Bad Auto Loans While Congress Defends Them - AMP.

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Article last modified on May 3, 2018. Published by Debt.com, LLC .