Wednesday, 09 December 2009 19:00
I first alerted dealers to the threat posed by the Consumer Financial Protection Agency (CFPA) back in October. Today, CFPA legislation continues to wind its way through both the House of Representatives and Senate. If passed, the legislation would establish the CFPA as a new, central agency responsible for regulating the country's financial institutions.
Like most Americans, international nameplate dealers support consumer protections to guard against corporate greed and arrogance. However, as it was originally written, the CFPA Act lumped our small, community businesses in with corporations like Morgan Stanley and Wells Fargo.
Dealers were surprised to learn that the government considered us to be both financial service providers AND a threat to consumers.
The CFPA would have subjected auto dealers to new and burdensome requirements. It ignored the fact that there are already effective safeguards in place to regulate the sales of motor vehicles and protect consumers, including the Federal Reserve, the Federal Trade Commission, and state attorneys general.
AIADA quickly swung into action with a phone and letter writing campaign and lobbying effort to gain a dealer exemption. Thanks in large part to your advocacy efforts, an amendment exempting dealers from CFPA oversight was inserted into the House of Representative's bill during its consideration in the House Financial Services Committee. The amendment was sponsored by California Congressman and former dealer John Campbell, who recognized that as originally written, the bill would result in fewer auto sales, less tax revenue, and more job loss. Dealers were optimistic that common sense would prevail.
Of course, just when we think we're out, they try to pull us back in.
When the dealer exclusion amendment was first introduced, North Carolina Congressman Mel Watt raised concerns over what auto dealer activities are exempted from the CFPA. Since then, efforts have been made to address Congressman Watt's concern with little success. A deal could not be reached without nullifying the actual exception itself and throwing dealers right back into the mix.
Congressman Watt now wants to take his language, which would subject the majority of dealers to CFPA oversight, straight to the House Floor as an amendment. In effect, he wants to amend our amendment. While the language he proposes only intends to "clarify" the dealer exemption, it would so narrowly define our activities that you might as well strip our exemption right out.
The Watt amendment to H.R. 4173, the Wall Street Reform and Consumer Protection Act of 2009, will soon be considered on the House Floor. It is absolutely vital that you call your Member of Congress TODAY and explain why passing the Watt amendment will hurt your business, the auto retail industry, and the economy as a whole. You can follow this link for talking points and contact information. When you're done, make sure all your employees do the same.
This is one of those times that you MUST take immediate action to protect your business.
Our message to Congress is simple: In this industry, dealers compete not only through sales but also through financing options for costumers. A program that would take away market forces determining conditions and terms of auto financing hurts both the consumer and the dealer. And that's bad business.