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Name | Symbol | Market | Type |
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Honda Motor Co Ltd | NYSE:HMC | NYSE | Depository Receipt |
Price Change | % Change | Price | High Price | Low Price | Open Price | Traded | Last Trade | |
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0.00 | 0.00% | 34.59 | 1 | 09:19:52 |
By Alan Zibel
WASHINGTON--U.S. authorities are poised to charge the lending arm of Honda Motor Co. with discriminatory loan practices, the company disclosed Tuesday, as part of a broad federal inquiry into whether auto lenders charge higher interest rates to minorities.
America Honda Finance Corp., the lending arm of the Japanese auto maker, said in a regulatory filing Tuesday it was notified last month that federal officials are prepared to proceed with an enforcement action against the company.
The Consumer Financial Protection Bureau and Justice Department "have indicated that they are seeking monetary relief and implementation of changes to our discretionary pricing practices and policies," Honda said in the filing. The company said it has cooperated with the investigation and wishes to achieve "a mutually satisfactory resolution." A company spokesman declined further comment.
The CFPB and the Justice Department are investigating whether auto dealers and lenders are raising the cost of car loans to minorities through extra interest-rate charges. Ally Financial Inc. agreed last year to a $98 million settlement as part of the government's probe, and didn't admit or deny the allegations.
A CFPB spokesman declined to comment Tuesday, and representatives of Honda couldn't immediately be reached for comment.
The disclosure follows a similar filing last week by Toyota Motor Co. A Toyota spokesman said in a statement that the company intends to work out a solution "that meets the CFPB's expectations and allows us to better serve our customers."
Over the past 18 months, officials at the CPFB have been probing a type of financing arranged by auto dealers, who typically originate loans for consumers on behalf of banks or other lenders, a practice called "indirect" auto lending.
Dealers are able to add extra interest-rate charges to consumers as compensation for setting up the loan. Federal officials say the system provides a financial incentive for dealers to charge higher rates and increases the risk of discrimination.
The CFPB, however, has faced questions from lawmakers who say the agency hasn't provided enough detail about its concerns to justify the probe. Auto dealers aren't subject to the CFPB's oversight under an exemption included in the 2010 Dodd-Frank financial law, but CFPB officials have the power to oversee lenders.
Write to Alan Zibel at alan.zibel@wsj.com
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