James Golden Quoted in “The Center for Auto Finance Excellence”

James Golden, Los Angeles-based member in the Firm’s Litigation Department whose practice focuses on financial services litigation and compliance, is quoted in an article—“Lenders Struggle with CFPB Auto Dealer Edicts”—that appeared recently in “The Center for Auto Finance Excellence,” a special section of Auto Finance News. “The Center for Auto Finance Excellence” provides senior executives content on best practices for auto finance ventures.

The article discusses the CFPB’s attempts to compel lenders to “police” the actions of their dealer clients (who are not regulated by the CFPB). One aspect of the CFPB’s crackdown concerns dealer markups and other discretionary mechanisms by which lenders compensate dealers, which the CFPB contends result in unfair “disparate impacts” on minority borrowers. Golden says that the little guidance provided by the CFPB guidance to date isn’t easy for lenders to follow:

“I think lenders are still having a tough time figuring out what to do. I don’t know that a lot of final decisions have been made,” Golden notes. Golden adds, “There’s a risk in finance companies becoming too much of a policeman, because finance companies are not dealers. Monitoring dealer pricing is kind of a double-edged sword” because lenders “don’t want to make the case” against themselves.

Golden says, “I do think clients want to do the right thing. But there’s going to be a lot of pushback if they’re told to end dealer markups, because they don’t think they’re doing anything wrong. And I’m not sure they’re doing anything wrong, either.”

To read this article in its entirety, click here.