It seems two major auto dealer trade groups share my doubts about whether the CFPB’s position on dealer rate participation will really help car buyers. In a statement responding to CFPB Bulletin 2013-02, the National Automobile Dealers Association and the National Association of Minority Automobile Dealers assert that the CFPB guidance “attempts to force auto finance sources into changing the way they compensate dealers without any indication that the Bureau has examined the effect this change could have on the cost of credit for consumers.” The trade groups observe that indirect auto lending has been “enormously successful in both increasing access to, and reducing the cost of, credit for” buyers. They charge that “[t]he CFPB’s attempt to eliminate the dealer’s ability to discount the APR that it offers to consumers will only weaken the consumer’s ability to secure financing at the lowest possible cost.”

The trade groups also share my concern about the lack of input from the FTC and the Fed. According to the trade groups, the CFPB’s approach “should not be accomplished without the full participation of the Federal Reserve Board and the Federal Trade Commission, which are the two agencies that Congress vested with authority over auto dealers engaged in indirect lending.”