GAO Finds that CFPB’s Indirect Auto Lending Guidance Is a ‘Rule’

The Government Accountability Office today issued a legal opinion that the Consumer Financial Protection Bureau’s 2013 guidance on fair lending risks in indirect auto lending constitutes a “rule” for purposes of the Congressional Review Act. The GAO ruled that the guidance — issued without notice and comment — is a general statement of policy with general applicability, does not meet any CRA exceptions and thus counts as a rule. The controversial guidance sought to impose limits on how and what indirect lenders pay car dealers who provide financing and how much discretion dealers have to set loan terms and rates.

“GAO’s decision makes clear that the CFPB’s back-door effort to regulate auto loans, which was based on a dubious legal justification, did not comply with the Congressional Review Act,” said Sen. Pat Toomey (R-Pa.), who requested the GAO review of the indirect auto guidance — as he did for interagency leveraged lending guidance that was likewise found by GAO to be a rule.

Under the CRA, Congress can in certain cases vote to overturn a regulation. “I intend to do everything in my power to repeal this ill-conceived rule using the Congressional Review Act,” Toomey added.