Important Lessons Involving Indirect Auto Lending

The federal bank regulatory agencies have recently become more aggressive with respect to examination and investigation of potential violations of law and regulation involving indirect auto lending by community banks in Virginia and across the mid-Atlantic. In our opinion, this more aggressive posture is attributable, at least in part, to the assertive stance of the CFPB with respect to larger financial institutions and the strong desire of the federal bank regulatory agencies (Fed, OCC and FDIC) not to lose their examination and enforcement authority in these consumer lending areas to the CFPB.

The federal banking regulatory agencies' direct regulatory authority extends to financial institutions with $10 billion or less in assets regarding the Equal Credit Opportunity Act, or ECOA, and its implementing regulation, Regulation B. Community banks that engage in indirect auto lending, however, should pay attention to statements and actions by the CFPB. As the most vocal