The way the Consumer Financial Protection Bureau is regulating the auto finance industry's relationships with dealers is simply wrong — both legally and ethically. It's also directly counterproductive to its goal of protecting consumers.

Congress, in its occasional wisdom and, in no small part, as the result of lobbying by the nation's auto dealers, specifically carved dealers out of the CFPB's scope of oversight. This apparently did not sit well with the CFPB — which, in a thinly veiled end-around move, attempts to supervise auto dealers through the banks and nonbanks that offer financing to dealers. In effect, since it does not have the statutory authority to do so itself, the CFPB is forcing auto lenders to police dealers. The lenders must oversee how dealers mark up loans and assess whether there is any discrimination.

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