Pearson Quoted in American Banker On Auto Finance Lawsuit Implications

Manatt Consumer Financial Services Leader Scott Pearson was quoted in American Banker about a new federal lawsuit against a subprime auto finance company that may have negative impacts going beyond auto finance. 
At issue, in part, is the Consumer Financial Protection Bureau’s (CFPB) claim that discounts on dealers’ sale of credit sale agreements to the finance company are hidden finance charges, which Pearson called an “incredibly aggressive” approach.  He said it could impact other types of secondary market transactions and thereby reduce credit availability for consumers. 
"If they win, then investors in secondary markets are going to have less of an appetite for purchasing loans," Pearson said. "When that happens, then companies that are making loans in the first place are going to make fewer of them." 
American Banker subscribers can read the full article here.  


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