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CATA to push for contributions to NADA political action committee

August 12, 2016
Board members of the CATA will be calling their fellow dealers in the next months in a push to increase contributions to the National Automobile Dealers Association’s political action committee, NADA PAC.
NADA PAC, formerly named the Dealers Election Action Committee, or DEAC, represents the interests of all franchised dealers of new cars and trucks by supporting pro-dealer congressional candidates of both parties.
Only individuals from NADA member dealerships are eligible to contribute to NADA PAC, and only personal checks or credit cards can be used to submit donations. Dealers and their employees must sign a NADA PAC permission form before they can contribute to the committee. To obtain the form, call the CATA at (630) 495-2282.
The CATA’s 2016 fundraising goal is $40,000. Individuals can contribute up to $5,000 annually to NADA PAC.
The top issue currently before NADA PAC is actions by the Consumer Financial Protection Bureau. A 2013 CFPB directive has impacted the auto loan market, yet it was issued without prior notice, public comment or a hearing. Based on its actions, many dealers say they don’t think the CFPB even understands their business.
Texas dealer Robert Turner recently asked CFPB official Patrice Ficklin whether she realizes that dealers earn their margin rates from financial institutions the same way "banks earn that discount rate that the feds give them" and that a consumer’s finance rate is not the rate the dealer gets. He said every business buys goods at a wholesale price and sells them at a retail price — that is where the disparity lies. 
The U.S. House in late 2015 passed legislation that requires the CFPB to follow a transparent process when issuing auto finance guidance. That bill has not been considered by the Senate, and similar legislation introduced by the upper chamber also has stalled.
The Obama administration reportedly opposes the House bill, which impacts auto financing arranged by auto dealers, because it would "revoke important guidance designed to prevent discriminatory pricing of auto loans."
"The bill would create confusion about the existing protections in place to prevent discriminatory auto loan pricing, and effectively block the CFPB from issuing related guidance in the near-term," the White House said in a 2015 statement.
House Resolution 1737 won bipartisan support in the 332-96 vote, with 88 Democratic representatives joining 244 Republicans.
Most car buyers choose to finance their purchases through indirect financing at dealerships.  Dealers often discount an interest rate to "meet or beat" a competitor’s rate or meet a consumer’s budget needs.  The CFPB’s 2013 guidance pressures finance sources to change the way they compensate dealers in a way that would eliminate or limit a dealer’s ability to discount credit for consumers.  
The CFPB’s new policy would limit market competition and needlessly deny many consumers a better interest rate.