The Consumer Financial Protection Bureau has issued a proposal to supervise nonbanks qualifying as "larger participants" in the market for auto financing. The rule could be enacted by December 9, and higher operating costs could be the result.

"The cost of compliance obviously is going to be a big issue. That’s typically been the big impact on institutions as the CFPB has rolled out these larger-participant rules," said Ballard Spahr consumer financial services attorney John L. Culhane, Jr.

While "larger" banks and credit unions with total assets exceeding $10 billion are already under the CFPB's jurisdiction, the proposed rule would place nonbanks that originate 10,000 or more auto loans and leases a year under its jurisdiction, too. Mr. Culhane said the larger-participants rule could also enable the CFPB to apply its authority to crack down on “unfair, deceptive, or abusive acts or practices” in leasing.

Practice Areas

Business and Finance
Consumer Financial Services