NADA, AFSA Stand Up in Support of Dealers, Lenders
WASHINGTON, D.C. — The National Automobile Dealers Association, along with other commercial lending executives representing four major banks, met with the Small Business Administration recently to discuss ways to make the SBA's dealer floor plan pilot program more effective.
The association urged the SBA to make the pilot program permanent and to simplify it so it's more user-friendly and can allow loan advances of up to 100 percent of inventory value with the maximum SBA guarantee.
"The SBA clearly recognizes the importance of helping the retail auto industry. But significant changes need to be made to the agency's dealer floor plan program to make it work," explained Ed Tonkin, NADA chairman, who participated in the meeting.
Additionally, NADA is looking to enhance the eligibility of dealerships for SBA programs. The association is pushing for a shift from a gross receipts-based dealership size standard to one based on the number of dealership employees.
"We are pleased to learn that the SBA is working diligently on a new size standard rule," Tonkin pointed out. "We expect the agency to render a decision later this year."
In other financial news, various groups have come together to oppose Sen. Chris Dodd's financial reform proposal.
For instance, Chris Stinebert, president and chief executive officer of the American Financial Services Association, released a statement that noted, "AFSA has major concerns with this proposal as we believe it's bad for consumers and problematic for our members.
"While we share Chairman Dodd's goal of improved consumer protections for financial services customers, the creation of another federal entity, whether it's packaged as an autonomous bureau within an existing regulator or separate, independent agency, is not the answer. Consumers will be the ultimate losers, as they'll end up with higher costs, limited credit access and fewer choices," he said.
The NADA and AFSA also joined together to send a letter to Clifford Stanley, Under Secretary of Defense for Personnel and Readiness,
The letter explains, "We understand that proponents of the Consumer Financial Protection Agency (CFPA) have been circulating your Feb. 26, 2010 letter to Treasury Department Assistant Secretary for Financial Institutions Michael S. Barr on the subject of auto financing. The letter, which provides results from an informal, unscientific poll of service members and their families, cites abuses and practices that are already illegal.
"The auto finance industry does not condone such practices and, over the years, has undertaken several initiatives to help all consumers make informed decisions about financing a car or light truck," the letter indicated.
Officials went on to say that the Defense Department letter suggests that protections against unscrupulous automobile sales and financing practices should not limit service members' access to legitimate products.
"We, as an industry, worked closely with the Administration to ensure that auto lenders and dealers had the necessary liquidity to weather the financial crisis of 2008 and continue providing access to credit to customers. Now, it appears that the Administration may be considering changes to the CFPA proposal based on informal surveys and anecdotes," the joint letter from AFSA and NADA said.
"Financial reform legislation should properly focus on what led this nation to an economic crash last year. The retail auto industry, whose lifeblood is access to affordable credit, was a victim of the 2008 economic crash, not a contributor to it. As you deliberate on the best way to provide consumer protection in the financial services arena, we would appreciate the opportunity to meet with you and provide a complete, factually based picture of the auto finance industry. Thank you for your consideration," it concluded.