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Details sought on CFPB unfair lending allegations

June 7, 2013
By Mark Scarpelli, Chicago Metro NADA Director
 
A letter circulated by Rep. Terri Sewell (D-Ala.) and signed by 12 of her Democratic colleagues on the House Financial Services Committee was sent to CFPB director Richard Cordray. The May 28 letter asks for the analysis and methodology supporting the CFPB’s assertion in recent fair lending guidance issued to finance sources that there may be disparate impact discrimination in indirect auto lending.
 
The CFPB is using this allegation to push finance sources to compensate dealers with flat fees instead of dealer reserve. Despite numerous requests, the CFPB has steadfastly refused to release this information or any data supporting its efforts to eliminate the dealer’s ability to discount the interest rate offered to consumers.
 
This lack of transparency, coupled with the lawmakers’ concern that “credit markets function competitively and efficiently,” prompted this inquiry. The other signers of the letter were Reps. Joyce Beatty (Ohio), William Lacy Clay (Mo.), John Delaney (Md.), Bill Foster (Ill.), Denny Heck (Wash.), Dan Kildee (Mich.), Gregory Meeks (N.Y.), Patrick Murphy (Fla.), Ed Perlmutter (Colo.), Gary Peters (Mich.), David Scott (Ga.) and Kyrsten Sinema (Ariz.) 
 
In NADA news ...
 
• The National Autombile Dealers Association won a victory in its NLRP poster court challenge.
 
As a member of the Coalition for a Democratic Workplace, the NADA joins in a victorious federal court decision throwing out the National Labor Relations Board’s mandate that 6 million employers — including dealerships — post notices informing employees of their rights under the National Labor Relations Act. The CDW successfully argued that the NLRB lacked the statutory authority to require the poster.
 
Other parties to the lawsuit included the National Association of Manufacturers, the National Federation of Independent Business, and the U.S. Chamber of Commerce.
 
Bottom line: dealerships do not need to display the poster.
 
• Peter Welch, the new NADA president, testified before the Senate consumer protection subcommittee on the rental car recall bill. Welch’s May 21 testimony on S. 921 emphasized the vital role that auto dealers play in fixing recalled vehicles.
 
While supporting the purpose behind the bill, Welch informed senators that recall work can sometimes be delayed because the part needed to remedy the recalled vehicle has not yet been designed or manufactured. Under the bill, a rental vehicle would have to be put out of service if the part needed was unavailable.
 
Welch cautioned senators against regulating “multinational corporations with fleets of hundreds of thousands of rental vehicles” the same as “auto dealers with fleets of five loaner vehicles.” Welch also raised concerns that the bill would subject dealers to new federal inspections, new federal reporting requirements and stiff new penalties.
 
In other news ...
 
• The U.S. Department of Labor on May 8 provided “temporary guidance” regarding the written notice employers are required to provide to their employees under the Patient Protection and Affordable Care Act, which requires applicable employers to provide each employee with a written notice about the state- and federally-facilitated health insurance exchanges and how to request assistance, describing the availability of a premium tax credit (if applicable) and outlining the implications for the employee if they choose to purchase a qualified health plan through an exchange.
 
The notice requirement originally was scheduled to take effect March 1, 2013, but subsequent guidance has indicated that the timing for distribution of notices will be the late summer or fall of 2013, in coordination with the open enrollment period for exchanges.
 
• Along with technical release, the following model notices have also been issued by the Department of Labor:
 
Model notice for employers who offer a health plan to some or all employees;
Model notice for employers who do not offer a health plan;
• COBRA model election notice; and
• COBRA model election notice redline version.
 
Dealers should consult their health care consultant, insurance carrier or other outside professional to determine which form is appropriate for your dealership, and how to properly complete and distribute that form to your employees.
 
• The National Automobile Dealers Charitable Foundation mobilized emergency relief for victims of the Oklahoma tornados and will continue to work with the state and metro dealer associations to notify dealers and their employees that financial assistance from its Emergency Relief Fund is available.
 
Employees can apply directly to NADA for emergency assistance or dealers can apply on behalf of their affected employees. Last year, after Hurricane Sandy hit the Northeast, more than $500,000 was distributed to 700 dealership employees.
 
 

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