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President signs financial reform law

November 12, 2010

By Ray Scarpelli Sr., Metro Chicago NADA Director

With President Obama’s signature, the most significant overhaul of the nation’s financial system is now law. And with it, consumers still can find competitive financing options at auto dealerships.

Ed Tonkin, the NADA chairman, praised the efforts of lawmakers who fought to preserve the existing regulatory structure for dealer-assisted financing, which protects consumers and ensures affordable auto credit. Tonkin also cautioned that any regulatory overreach could hurt the very people it is looking to protect by disrupting the extremely competitive auto finance marketplace. "The new law maintains existing consumer protection laws, while permitting millions of American families to continue to have multiple financing options to purchase a vehicle," Tonkin said.

A report released last month provides fresh evidence that the quick and drastic cuts to the Chrysler and GM dealer networks last year were unjustified. The special inspector general for the Troubled Asset Relief Program on July 18 released a report critical of the Obama administration’s auto task force for failing to weigh the broader economic impact of closing more than 1,000 dealerships in the wake of the GM and Chrysler bankruptcies. According to the report, the companies had called for a gradual reduction in dealerships, but the auto task force accelerated the process, increasing job losses to the detriment of the national economy.

"Treasury made a series of decisions that may have substantially contributed to the accelerated shuttering of thousands of small businesses and thereby potentially adding tens of thousands of workers to the already lengthy unemployment rolls – all based on a theory and without sufficient consideration of the decisions’ broader economic impact," said the 45-page report.

Ed Tonkin said the report confirms what was said in NADA’s testimony before Congress in several hearings and to the auto task force in multiple meetings: "We do not see how these cuts make economic sense – not for the companies, not for the dealers, not for local communities and certainly not for the struggling U.S. economy.

"Similarly confirmed by the report was the NADA’s unwavering position, also presented to Congress on multiple occasions, that ‘rapid dealer reductions increase unemployment, threaten communities and decrease state and local tax revenue without any material corresponding decrease in the automaker’s costs.’

"Importantly, the Inspector General’s report also validates the Congressional efforts which gave thousands of dealers the opportunity to have a neutral arbitrator review their cases and possibly save thousands of jobs.

"Finally, the report demonstrates what NADA has maintained for many years – that the franchised automobile dealership is and will continue to be the most powerful job-creating entity on Main Streets all across America and that the NADA’s 17,000 members provide long-term economic opportunity for nearly 1 million Americans."

(To watch an interview about the dealership closures with TARP Special Inspector General Neil Barofskyclick here. To read the statement by Sen. John D. (Jay) Rockefeller IV, chairman of the U.S. Senate Committee on Commerce, Science, and Transportation, click here.)

In other legislative and regulatory news . . .

The NADA earlier this month joined numerous other business organizations in drafting a letter to Sen. Mike Johanns (R-Neb.), supporting his effort to repeal a new Form 1099 requirement included in the health care reform bill. Under the bill, companies, nonprofits and government offices are required to file Form 1099 with the IRS when goods purchased from another business exceed $600 in a year. Under previous law, the reporting requirement pertained only to services exceeding that amount.

"This new and expanded requirement means that almost every business-to-business transaction is potentially reportable to the IRS," the letter to Johanns states. "The new requirements will dramatically increase . . . costs, pulling capital out of the business that could be better used to reinvest in the business and create jobs."

In other NADA news . . .

• Early registration and hotel selection is underway for the 2011 NADA Convention & Expo in San Francisco, Feb. 5-7, at Detailed information about all hotels also is available online. More than 20 hotels have been secured and rates have been reduced, ranging from $139 to $269. Be sure to register and make your hotel reservations today, as San Francisco hotels typically fill up quickly!

• The 2011 Convention & Expo has built a strong following on social media sites Facebook, Twitter and LinkedIn. Visit the event’s Facebook page ( and Twitter feed (, first introduced at the 2010 convention in Orlando and with 1,500 followers as of late July. It also is on the professional networking site LinkedIn at