How is Obama Administration Impacting Auto Finance Market?
MINNEAPOLIS — As President Obama passed the 100-day mark of his presidency this week, legal and compliance analysts from Wolters Kluwer Financial Services offered their perspectives on how his administration is impacting several aspects of the financial regulatory environment, including the auto finance market.
Kevin Kopp, who is the general manager of indirect lending at Wolters Kluwer, said one of the impacts in the auto sector has been a reduction in subprime loans.
"Many consumers and auto dealerships have found that most of the near-prime and subprime lenders have pulled out of that market niche," Kopp suggested. "This has inhibited retail sales, leaving many auto dealerships feeling the pinch."
There has been a greater focus on consumer protection and industry regulation in the auto sector, Kopp shared, and this means that dealers should "pause and reflect on their own practices" and ensure that their stores are taking all necessary measures to reduce risk.
Sharing Kopp's sentiment, Kevin Byrne, senior regulatory consultant at Wolters Kluwer, emphasized that financial institutions across the board will need to be adamant about making sure they're taking all the steps to combat identity theft, money laundering and terrorist financing.
He noted the record number of Suspicious Activity Reports filed last year as a sign that that such financial crimes are being more prevalent.
"In a down economy, instances of fraud committed out of desperation by consumers, as well as an institution's own employees, often grow dramatically," Byrne stated. "When you combine that trend with the growing sophistication and globalization of today's financial criminals, you create an environment ripe for an overall spike in fraudulent activity."
In general, Wolters Kluwer analysts said that the enhanced consumer-protection legislation that is currently being debated in Congress has "already changed the mood within the financial services industry" across all market sectors.
"Regulators are feeling much more empowered than they were during the previous administration," explained Edward Kramer, executive vice president for regulatory programs at Wolters Kluwer.
"More stringent regulatory exams, a rising number of enforcement actions and the growing number of financial institution closings during the first quarter of this year are evidence of that," he added.