The U.S. Government Accountability Office (GAO) said a 2013 rule on indirect auto lending by the Consumer Financial Protection Bureau (CFPB) should not be valid since it was not submitted to Congress for review.
The March 21, 2013, issue of the CFPB Bulletin discusses the potential for pricing disparities on the basis of race, national origin, and other factors on indirect auto lenders for car loans. Indirect lenders with disparities in their portfolio may be liable under the legal doctrines of both disparate treatment and disparate impact, CFPB stated.
The Dec. 5 GAO report stated that “the Bulletin advises the public prospectively of the manner in which the CFPB proposes to exercise its discretionary enforcement power and fits squarely within the Supreme Court’s definition of a statement of policy.” It concludes that the guidance is subject to the requirements of the Congressional Review Act.
The discrepancy was brought to the GAO’s attention by a letter from Sen. Pat Toomey (R-PA), who asked if the bulletin on Indirect Auto Lending and Compliance with the Equal Credit Opportunity Act is subject to the Congressional Review Act (CRA).
“CRA establishes a process for congressional review of agency rules and establishes special expedited procedures under which Congress may pass a joint resolution of disapproval that, if enacted into law, overturns the rule,” the GAO wrote to Toomey. “Congressional review is assisted by CRA’s requirement that all federal agencies, including independent regulatory agencies, submit each rule to both Houses of Congress and to the Comptroller General before it can take effect. For the reasons discussed below, we conclude that the Bulletin is a general statement of policy and a rule under the CRA.”
The Supreme Court has described “general statements of policy” as “statements issued by an agency to advise the public prospectively of the manner in which the agency proposes to exercise a discretionary power.” In other words, as stated by the D.C. Circuit Court of Appeals in Pacific Gas & Electric Company v. Federal Power Commission, a statement of policy announces the agency’s tentative intentions for the future.
“A general statement of policy . . . does not establish a ‘binding norm.’ It is not finally determinative of the issues or rights to which it is addressed,” the letter continued. “The agency cannot apply or rely upon a general statement of policy as law because a general statement of policy only announces what the agency seeks to establish as policy.”