Pub. 15 2016-2017 Issue 3

N E W J E R S E Y C O A L I T I O N O F A U T O M O T I V E R E T A I L E R S I S S U E N O . 4 , 2 0 1 6 18 new jersey auto retailer Crystal Ball – Federal Regulatory Activity Under the New President BY MARVIN J. BRAUTH, ESQ. Since its inception, the Consumer Financial ProtectionBureau (“CFPB”) has taken an ex- pansive viewof its statutory authority andhas engaged inactivity that some consider beyond its mandate. For example, the CFPB, based on its authority to regulate financial institu- tions, has attempted to eliminate, or certainly control and limit, dealer markups on retail installment sales contracts sold by dealers to financial institutions. It has taken this action on the basis that the financial institutionswere discriminating againstminorities because the markups they were allowing dealers to take were allegedly higher for minorities than for other customers. Before going after a target financial institution, though, theCFPBmade no effort to prove actual discrimination di- rectedagainst aminority. Rather, it reliedona statistical analysis that showed thatminorities were disproportionately among those charged highermarkups by dealers. TheCFPBanaly- sis, however, did not address credit history, difficulty in securing credit or other factors that could affect the markup, but which are not discriminatory. While the House of Representatives slapped the CFPB down for its use of this formula, and, notwithstanding the fact that the CFPB has no jurisdiction to regulate motor vehicle dealers, the CFPB has not backed down on its efforts to regulate dealer markups. In a more business-friendly Trump Administra- tion, it is likely that the CFPB will pull back on activities in which the CFPB is stretching its authority beyond the limits of its enabling statute. It is even conceivable that legislation will be pushed in Congress to eliminate or curtail the functions of the CFPB. Unlike new motor vehicle dealers, “buy here – pay here” dealers are subject to CFPB N ow that the 2016 Presidential election is over, it is possible to look into the crystal ball to make predictions on the future course of regulatory activity on the Federal level. It is likely that at least some big changes are in store.