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New CFPA bill means new worries for dealers

November 16, 2010

Dealers in October sidestepped a federal bill that would have subjected dealer-assisted financing to numerous new, and in some cases, duplicative regulations. An amendment to House Resolution 3126 exempted them from the reach of the proposed Consumer Financial Protection Agency.

But the House is debating the formation of the CFPA under another bill—H.R. 4173, introduced Dec. 2—in which all financial dealings between businesses and consumers throughout the country would be regulated, including those involving dealerships.

An amendment to H.R. 4173, offered by Rep. Mel Watt (D-N.C.), effectively would nullify the exemption dealers gained in H.R. 3126. The American International Automobile Dealers Association has sounded a call to action, for dealers to contact their representatives to oppose the Watt amendment.

Congress wants to establish the CFPA, a watchdog group, in light of the collapse last year of major banks. But the AIADA contends that the activities of dealers related to financing cars already are regulated by state and federal laws; and that dealers did not contribute to the 2008 financial collapse.

Accordin​g to the Federal Trade Commission, only 1 percent of consumer complaints last year regarded the auto sector—and those complaints encompassed many areas other than auto financing.

Other AIADA talking points for dealers to tell their congressmen:

&bull​; Auto dealerships are not financial institutions. We did not cause the economic meltdown in 2008; therefore, dealers shouldn’t be subjected to the consequences of Wall Street’s actions.

• We don’t need more regulators. Financial transactions that take place within dealerships already are monitored by the the FTC, the Federal Reserve, and state attorneys general.

• Exclude dealers from the CFPA. Congress should retain a FULL exemption for auto dealers in H.R. 4173.