NADA Headlines (May 13, 2010)
NADA Response to Obama Statement on Financial Reform
WASHINGTON – Ed Tonkin, chairman of the National Automobile Dealers Association (NADA), issued the following remarks today in response to a statement from President Obama on financial reform:
“Sadly, the White House is continuing to issue misleading statements in its efforts to get auto dealers wrongly included in Wall Street reform legislation. Much of what’s included in its latest statement is pure fiction.
1. It urges senators not to support the Brownback amendment because financial reform needs to include ‘auto-dealer lenders.’ But the Brownback amendment does not exempt auto-dealer lenders. Any dealer, bank, credit union or other finance company that actually underwrites and funds auto loans would be subject to the proposed consumer protection agency. And we’re absolutely fine with that. What we don’t support is including auto dealers who simply assist customers to find auto financing. These dealers are not banks. They are facilitators. And dealer-assisted financing is already heavily regulated – and should not be subject to double regulation.
2. The enormous set of consumer protection laws that currently governs dealers will be preserved under the Brownback amendment. Despite what the Administration suggests, unfair and deceptive practices are currently illegal and would remain so if the Brownback amendment is passed. Moreover, all of the laws that dealers are currently subject to (e.g., Equal Credit Opportunity Act, Truth In Lending Act, Federal Consumer Leasing Act, Fair Credit Reporting Act, Gramm Leach Bliley Act, Federal Trade Commission Act) would still exist and apply to dealers if the Brownback Amendment is approved.
“At the core of the Administration’s attack on dealer-assisted financing is the assertion that dealers routinely place consumers in ‘loans with higher interest rates than the borrower qualifies for.’ This statement is patently false. What’s worse, it manifests either an inability or a refusal on the part of the Administration to recognize how the market, which they claim needs more regulations, actually works.
“Dealer-assisted financing – which is always optional – regularly affords consumers more favorable terms than those available through other sources. Yet, the Administration seeks to subject dealers to an agency which is being directed to create an uneven playing field by declaring off-limits for dealers practices that will be preserved for community banks, credit unions and other direct lenders.
“For the President, in the statement attributed to him, to malign an entire industry made up of Main Street businesses run by dedicated men and women and their employees is shocking. We urge senators to resist this latest round of scare tactics and vote in favor of the Brownback amendment to preserve affordable auto finance options for consumers.”
 The Brownback Amendment specifically states that, “nothing in this section shall be construed to modify, limit, or supersede the rulemaking or enforcement authority over motor vehicle dealers that could be exercised by any Federal department or agency on the day before the date of enactment of this Act.”
Editor's note: The vote on the Brownback Amendment may occur as early as today, so it is urgent to keep up the grassroots effort, especially in light of the president's misleading statement in opposition to the Brownback Amendment, says David Regan, NADA vice president of legislative affairs. Senators can be reached through the Capitol switchboard at (202) 224-3121. Additional documents supporting NADA’s position on the Brownback Amendment can be found at www.nada.org/brownback.
By Paul Ingrassia
Congress is designing everything from the braking system in your next car to the loan with which you'll finance it. Be very afraid.
Having spent more than $100 billion to rescue the American auto industry, Congress now seems intent to destroy what it saved. I'm not sure what to call this, but maybe the best term is vehicular homicide. Exhibit A, already in place, is the new Corporate Average Fuel Economy (CAFE) standard requiring new cars to average 35.5 miles per gallon by 2016, an increase of nearly 30%. Exhibit B is the proposed Wall Street reform that would add another regulatory layer on top of the multiple agencies that already regulate dealer-originated financing of their customers' vehicles. The redundancy will add complexity and costs to making car loans. The irony is that auto lending was a victim of the financial crisis, not a cause. Now comes Exhibit C, the proposed new car-safety law sponsored by Sen. Jay Rockefeller (D., W. Va.) and Rep. Henry Waxman (D., Calif.) It's hard to escape the conclusion that what's going on is a power grab or a headline grab, or perhaps both. And that there's a rush to enact the laws quickly before the scary headlines fade away or the Democrats' congressional majorities evaporate. Read more from The Wall Street Journal.
The Senate version of legislation to overhaul financial-markets regulation cleared several hurdles Wednesday and appeared likely to pass in the next week. Lawmakers, with bipartisan support, approved a series of refinements to the bill that essentially exempt more than 7,500 community banks from examination by a new consumer-protection regulator and permit small banks to pay less than they had in the past for deposit insurance. "So far, it's looking pretty good for community banks and Main Street," said Camden Fine, chief executive of the Independent Community Bankers of America trade group. Separately, lawmakers on Wednesday unanimously approved an amendment proposed by Sens. Olympia Snowe (R., Maine) and Mary Landrieu (D., La.) that excludes dentists and other small businesses from oversight of the new consumer-protection division within the Federal Reserve. Several Republicans and centrist Democrats had argued that the legislation could subject small businesses to more regulation. The change eliminates much of that concern. Read more from The Wall Street Journal.