Regulation of Dealer Financing Suddenly Looks Likely

Regulation of Dealer Financing Suddenly Looks Likely

In a move that caught the financial industry off guard, the Senate Banking Committee this week passed its version of financial re-regulation, including a Bureau of Consumer Financial Protection (BCFP), on a party-line vote of 13-10. The BCFP would be a department within the Federal Reserve with broad powers to regulate and oversee the activities of consumer credit providers, including dealer finance and insurance operations. A House version of the measure had excluded franchise dealer financing activities and it had initially appeared this would be the case in the Senate measure as well, but its chief proponent, Sen. Christopher Dodd (D-Conn.), included dealers when his efforts failed to produce a bi-partisan approach to the regulatory effort. If dealers are to be exempted from the BCPF, the amendment to make it happen will now need to occur on the Senate floor, where debate is expected to begin the week of April 12th.

NADA maintains dealers are already properly regulated under existing consumer protection regulations, but in supporting the Senate measure, President Obama recently reiterated his strong objection to exempting “debt collectors, credit bureaus, payday lenders or auto dealers (emphasis added).” This week he also urged the Democratic sponsors of the legislation in the Senate and House to press ahead with or without Republican backing, noting that the Democrats have the upper hand. Senator Dodd said he will seek final passage of the Senate measure about mid-month, in April.

With many Senators in their home states for a Congressional recess from March 29 until April 9, NADA is urging dealers and their associations to begin making appointments with their Senators, especially Democrats, to discuss the consequences of the proposed BCFP. We need the strong engagement of dealers and ATAEs to defeat or amend this flawed bill, said NADA chairman Ed Tonkin, an Oregon dealer.

For more information, or if you have questions, please contact the NADA Legislative Office at 1-800-563-1556 or legislative@nada.org.