Attention Washington: A Dealer is not a Bank

Wednesday, 14 April 2010 08:06

When America's banking industry collapsed upon itself more than a year ago, it set off a chain of events that led to a global recession. All of us, from car dealers to recent grads to farmers, are still reeling from the after effects of the bad decisions made by financial institutions.

Many believe that those bad decisions ought to have been criminal. And that the institutions in question must be more closely monitored by the Federal government in order to prevent future disasters. Forming a Consumer Financial Protection Agency (CFPA) or a Bureau of Consumer Financial Protection (BCFP) to do so has been a goal of the White House from day one.

I grew up and still live just a few miles from Wall Street.  Many of my friends and neighbors work there. They do their financial thing and I sell cars. We all know that selling cars is nothing like making deals on Wall Street. Unfortunately, under the proposed Senate bill to form a financial oversight agency, dealers would be treated like big Wall Street banks.

Obviously, car dealers aren't banks. You know how you can tell? No employee, at any dealership, ever received a multi-million dollar annual bonus for just doing his job. No car dealer ever pushed a sub-prime home loan on a family that couldn't afford it and then foreclosed on that home. No car dealer ever gambled anyone's retirement savings on toxic mortgage-backed securities. No car dealer has EVER been too big to fail.

Also, car dealers sell cars.

So why is the Obama administration so determined to include dealers under the new agency's oversight alongside banks like Wells Fargo and Goldman Sachs? I have absolutely no idea. I do know that now is the time for dealers to take action.

The Senate will consider a bill finalizing a new consumer protection agency as soon as next week. They will also vote on the Brownback Amendment, submitted by Sen. Sam Brownback (R-Kan.), which would exempt dealers from the legislation. Follow this link for more information on the CFPA or BCFP and instructions on how to contact your representatives in Washington TODAY.

We need to let our legislators know that

• Dealer financing is already regulated by the Federal Trade Commission, the Federal Reserve, and other entities.
• Financial institutions are on the hook to pay for this expensive new agency. That's a cost dealers, unlike banks, can't afford. And that will mean lost sales and jobs.
• Serious financial reform should focus on the real causes of our economic collapse. Dragging dealers into the mix muddies the waters and takes the heat off banks.

Our message to Congress is simple: Dealers aren't banks. We're small, local businesses. Do us, our employees, and our customers a favor by treating us that way.

Rick DeSilva
AIADA Chairman