NADA Takes Issue with Obama’s Stance on Brownback Amendment
WASHINGTON, D.C. — Debate over creation of the Bureau of Consumer Financial Protection intensified as the U.S. Senate neared a vote to consider an amendment many argue is paramount to sustaining current dealer operations nationwide.
Late Wednesday, the White House joined the fray, releasing a statement that did not sit particularly well with the National Automobile Dealers Association. President Obama declared his displeasure to amendments altering an extensive financial regulation bill slowly working its way through the Senate.
"Throughout the debate on Wall Street reform, I have urged members of the Senate to fight the efforts of special interests and their lobbyists to weaken consumer protections," Obama stressed in a statement. "An amendment that the Senate will soon consider would do exactly that, undermining strong consumer protections with a special loophole for auto dealer-lenders."
Upon hearing that stance and tone, NADA chairman Ed Tonkin responded by vigorously reiterating the association's position. Tonkin and association leadership have emphasized over and over that this bureau would produce sweeping powers to control dealer-assisted financing and more.
"Sadly, the White House is continuing to issue misleading statements in its efforts to get auto dealers wrongly included in Wall Street reform legislation. Much of what's included in its latest statement is pure fiction," Tonkin insisted.
NADA has urged its membership to contact its senators to ask for support of an amendment by Sen. Sam Brownback, a Republican from Kansas. Brownback's proposal would exempt dealers from the bureau.
As of press time, the Senate had yet to take up a vote. Other reports have projected that debate over the Brownback amendment might be pushed back again to possibly next week.
That amendment, however, is apparently the "loophole" Obama referenced in his latest statement.
"This amendment would carve out a special exemption for these lenders that would allow them to inflate rates, insert hidden fees into the fine print of paperwork, and include expensive add-ons that catch purchasers by surprise," Obama believes
"This amendment guts provisions that empower consumers with clear information that allows them to make the financial decisions that work best for them and simply encourages misleading sales tactics that hurt American consumers. Unfortunately, countless families — particularly military families — have been the target of these deceptive practices," the president continued.
"Claims by opponents of reform that this legislation unfairly targets auto dealers are simply mistaken," Obama went on to say. "The fact is, auto dealer-lenders make nearly 80 percent of the automobile loans in our country, and these lenders should be subject to the same standards as any local or community bank that provides loans. Auto dealer-lenders offering transparent and fair financing products to their customers should welcome these reforms, which will make their competitors who don't play by the rules compete on a level playing field."
Obama wrapped up his latest statement by reiterating his displeasure with what lobbyists are doing, noting: "We simply cannot let lobbyist-inspired loopholes and special carve-outs weaken real reform that will empower American families.
"I urge the Senate to continue to defeat the efforts of special interests to weaken protections for all American consumers," he emphasized.
Despite the vigor coming from the White House against the Brownback amendment, it didn't stop Tonkin from restating how vital this addition to proposed legislation is to the industry's health and performance.
Tonkin began again by stating the president's stance "urges senators not to support the Brownback amendment because financial reform needs to include 'auto-dealer lenders.' But the Brownback amendment does not exempt auto-dealer lenders.
"Any dealer, bank, credit union or other finance company that actually underwrites and funds auto loans would be subject to the proposed consumer protection agency. And we're absolutely fine with that," Tonkin continued.
"What we don't support is including auto dealers who simply assist customers to find auto financing. These dealers are not banks. They are facilitators. And dealer-assisted financing is already heavily regulated — and should not be subject to double regulation," he went on to say.
Tonkin also highlighted that Brownback's amendment doesn't release dealers from any responsibilities they already fulfill.
"The enormous set of consumer protection laws that currently governs dealers will be preserved under the Brownback amendment. Despite what the Administration suggests, unfair and deceptive practices are currently illegal and would remain so if the Brownback amendment is passed," Tonkin stressed.
"Moreover, all of the laws that dealers are currently subject to — Equal Credit Opportunity Act, Truth In Lending Act, Federal Consumer Leasing Act, Fair Credit Reporting Act, Gramm Leach Bliley Act, Federal Trade Commission Act — would still exist and apply to dealers if the Brownback Amendment is approved," he articulated.
Tonkin explained that NADA is working diligently in Washington to overcome misconceptions that he believes are being perpetuated by some lawmakers and now the president.
"At the core of the administration's attack on dealer-assisted financing is the assertion that dealers routinely place consumers in 'loans with higher interest rates than the borrower qualifies for.' This statement is patently false," Tonkin insisted.
"What's worse, it manifests either an inability or a refusal on the part of the administration to recognize how the market, which they claim needs more regulations, actually works," he noted.
Tonkin went to highlight how dealers' offers usually work to the benefit of the customer, not the reverse.
"Dealer-assisted financing — which is always optional — regularly affords consumers more favorable terms than those available through other sources," Tonkin pointed out.
"Yet, the administration seeks to subject dealers to an agency which is being directed to create an uneven playing field by declaring off-limits for dealers practices that will be preserved for community banks, credit unions and other direct lenders," he added.
Tonkin closed his latest commentary by emphasized his disappointment with Obama's approach to this issue.
"For the president, in the statement attributed to him, to malign an entire industry made up of Main Street businesses run by dedicated men and women and their employees is shocking," Tonkin declared.
"We urge senators to resist this latest round of scare tactics and vote in favor of the Brownback amendment to preserve affordable auto finance options for consumers," Tonkin concluded.
Editor's Note: Stay tuned to AutoRemarketing.com for the latest developments regarding this story.