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Urge Congress to rescind flawed CFPB 'guidance' on auto finance

October 10, 2014
By Mark Scarpelli, Chicago Metro NADA Director
A new bipartisan bill which would nullify the Consumer Financial Protection Bureau’s flawed ‘guidance’ on indirect auto lending has gained a lot of support in Congress from both sides of aisle over a short period of time. 
Since its introduction on Sept. 8, nearly 100 Democrats and Republicans in the U.S. House of Representatives have signed on as supporters of House Resolution 5403, a bill sponsored by Reps. Marlin Stutzman (R-Ind.) and Ed Perlmutter (D-Colo.).
H.R. 5403, which, appropriately, is titled the Reforming CFPB Indirect Auto Financing Guidance Act, requires the CFPB to provide a public comment period before reissuing any guidance on auto finance. The bill also requires transparency and accountability from the agency by making public any studies, data and analyses used to determine future guidance on auto finance.
Dealer-assisted financing provides great value and competitive advantages, which saves car buyers billions of dollars each year. And the proof is in the numbers. Compared to other lending sources, a large majority of car buyers choose to finance their vehicles through new-car dealerships, which is always optional.
Despite this fact, the CFPB is taking actions that will ultimately harm car buyers by reducing competition in the auto-lending marketplace.
This controversy with the CFPB has been ongoing since March 2013, when the agency issued its "guidance," which took the wrong direction by attempting to eliminate the flexibility of new-car dealers to discount financing rates offered to their customers. Since then, the industry — from dealers to lenders — and members of Congress have worked to bring greater transparency and accountability to the CFPB.
Make no mistake, this issue is complex. But what the NADA wants from the CFPB is quite simple, and our message to the CFPB is this: Make sure you fully understand the industry you’re attempting to regulate before issuing guidance, by allowing for feedback and public participation. Be aware that your actions can harm consumers rather than protect them. And car buyers should not be forced by a government agency to lose their ability to negotiate discounted auto loan rates in dealer showrooms.
Dealers should contact their House representatives and urge them to support H.R. 5403, the Stutzman-Perlmutter bill. For more information, visit
In NADA news ...
• The third annual Dealership Workforce Study drew significant dealer participation, with more than 2,000 dealerships enrolled in the examination of car and truck dealership compensation, retention and turnover, hours of operation, work schedules and employee benefits. 
Participants will soon receive a complimentary Basic Report that compares their individual dealership(s) to the regional and national industry, and a complimentary Industry Report providing an overall economic analysis and trends with data for all nine regions of the U.S. 
Participants can purchase specialty reports, including the Enhanced Report, which provides state and brand comparisons. Also available is the Compensation and Tenure Search Tool, offered as a bundle with the Enhanced Report for participants. With the Search Tool, users can find answers to ad hoc queries, including queries specific to their store or group. Users can search the entire Dealership Workforce Study database, which includes data from 930,000 payroll records and nearly 7,000 rooftops. 
The Search Tool and the Industry Report are offered as standalone products for non-participants.
• The NADA-ATD Academy expands its curriculum in 2015. The Dealer Candidate Academy includes a mock 20 Group session for students to experience the benefits of the financial composite used in a non-competing peer setting. 
In the General Dealer Management program, a 20 Group consultant takes students through a dealership visit, demonstrating the benefits of in-dealership consulting. All classes — DCA, GDM and ATD — visit NADA’s Capitol Hill office for a legislative briefing. 
Finally, NADA University Online is integrated into the six-week Academy program, with completion of online courses, Driven guides and webinars requisite to graduation.