Phone: 630-495-2282 Fax: 630-495-2260 Map/Directions
 

Fight looms to exempt dealers from consumer protection agency bill

November 10, 2010

The Senate Banking Committee in March passed its version of financial re-regulation which includes a new consumer protection agency that would envelop dealer finance and insurance operations, and would not exempt dealers.

President Obama said he would not accept loopholes "for the most egregious abusers of consumers, from payday lenders to auto finance companies. . . ."

Ed Tonkin, chairman of the NADA, immediately shot back, saying that auto financing had nothing to do with the onset of the country’s financial meltdown "because its lending model prudently focused, and continues to focus, on (i) the borrower’s ability to repay the financial obligation (and not the depreciating collateral that supports the obligation) and (ii) the dealer’s ability to retain the customer as a service customer and future vehicle purchaser."

Dealerships were exempted in December from the reaches of the new Consumer Financial Protection Agency proposed by the House.

Dealers, like other financial institutions, already are subject to extensive federal regulation, among them the Equal Credit Opportunity Act, Truth-in-Lending Act, Federal Consumer Leasing Act, Fair Credit Reporting Act, and the Federal Trade Commission Act.

And unlike many banks, dealers also are subject to the full range of state consumer protection statutes.

"Consequently," said Tonkin, "there is no basis to suggest that the new agency would fill a regulatory void in the area of dealer-assisted financing."

Dealers are urged to contact their senators to exempt dealers from the legislation.

 

 

 

Back