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Auto Dealers Excluded from Wall Street Reform Bill

Dealers and lobbyists head off regulation. Senator Byrd’s death now threatens the entire bill, in face of Republican opposition.

by on Jun.28, 2010

NADA was unhappy that Wall Street reform legislation would “unfairly increase federal regulation over dealerships."

President Obama suffered a political defeat late last week from members of the National Automobile Dealers Association, who successfully had themselves excluded from the financial regulations that are proposed to stop the reckless practices of Wall Street that caused the ongoing Great Recession.

Dealers who provide their own funds for loans would have been treated just like banks, credit unions and other auto lenders under the bill.

NADA was unhappy that what started as Wall Street reform legislation would “unfairly increase federal regulation over dealerships and potentially eliminate dealer-assisted financing.” (See NADA Fighting Wall Street Financial Reform )

The White House, Pentagon, the Department of Treasury and other consumer interest groups fought strongly to regulate auto dealers.

Among other things, the bill would create a new Bureau of Consumer Financial Protection, and curb abusive practices such as ‘bait and switch” where one interest rate or down payment is advertised, but much higher ones substituted.

There are also rules governing other questionable ploys, such as the failure to pay off liens on trade-in vehicles, or conditional loan agreements. These are all reasonable propositions say consumer advocates.

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However, the largely Republican members of the National Automobile Dealers Association, who have spent more than $3 million lobbying in “pay to play” Washington since last year, successfully defended their interests.   (more…)

Hoffa Joins UAW’s King at Good Jobs Now Rally

Thousands march on banking district calling for financial reform to limit reckless Wall Street practices that kill middle class jobs.

by on Jun.18, 2010

King, left, and Hoffa, right, marched together in Detroit. More cooperation coming?

Teamsters union General President Jim Hoffa joined newly elected United Auto Workers (UAW) President Bob King yesterday in a march down to Detroit’s banking district to “tell big banks and corporations that the assault on the middle class must end now.”

Representatives from the AFL-CIO, NAACP and Interfaith Worker Justice joined them.

The “Good Jobs Now!” march and rally brought advocates from workers’ rights and social justice groups together to call for a reinvestment in the middle class and a commitment to creating good jobs.

“It’s time to stop the war on the American worker,” Hoffa said. “It’s time to put America back to work. It’s time for us to say – enough is enough.”

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The march came just after King took over the leadership of the beleaguered United Auto Workers union. Because of the bankruptcies of Chrysler and General Motors, as well as the cutbacks at Ford Motor Company and their unionized suppliers, the UAW is facing union membership levels at lows not seen since the epic organizing fights that started of the 1930s and continued through the 1950s.  (more…)

NADA Fighting Wall Street Financial Reform

Trade group opposes regulation on car dealer lending practices.

by on May.12, 2010


Car dealers arrange for almost all auto financing. 

While the U.S. Senate tousles over the details of the contentious financial-regulation bill (S 3217), the National Automobile Dealer Association is lobbying to have car dealers exempt from some of the proposed reforms.

Among other things, the bill would create a new Bureau of Consumer Financial Protection, and curb abusive practices such as ‘bait and switch” where one interest rate or down payment is advertised, but much higher ones substituted.

There are also rules governing other questionable practices, such as the failure to pay off liens on trade-in vehicles, or conditional loan agreements. These are all reasonable propositions in the view of consumer advocates.

Nonetheless, NADA is unhappy that what started as Wall Street reform legislation would “unfairly increase federal regulation over dealerships and potentially eliminate dealer-assisted financing.”

Maybe so, but a Republican sponsored amendment to exempt car dealers from the proposed reforms was trounced last week, and it looks like car dealers will be included in the final version of the bill when it comes up for vote next week. Dealers who provide their own funds for loans will be treated just like the banks, credit unions and other auto lenders under the bill.

This has not stopped NADA from continuing to oppose the legislation since car dealers arrange for almost all of auto financing.

“Burdensome regulations would drastically increase the cost of a car loan and make it harder for consumers to qualify for credit,” NADA claims. “This hurts a family’s ability to find affordable transportation to meet their needs, particularly low-income families who do not have relationships with financing organizations.”

NADA has also issued a pole that claims support for the financial reform bill drops from 70% percent to 41% “when consumers learn that current legislation could make it more challenging and expensive to get auto credit,”

Well, as in all poling, how you ask the question determines the response.

Consider the poll:

Initial: “There is currently a bill before the U.S. Senate that focuses on changing the nation’s financial laws. Among other things, this bill would create a new Bureau of Consumer Financial Protection.”

Statement 1: “This financial reform legislation would allow the government to regulate auto dealers who simply provide customers with options from local lenders, making it more challenging and expensive to get financing through a car dealership.”

Statement 2: “This bureau could also dictate to auto dealers how they pay their employees.”

Given this language, are you surprised that NADA claims that support for the bill drops from 70% to 41% or that 65% of respondents would support an amendment to ensure that auto dealers can continue to provide dealer-assisted financing?

What would happen if we asked the respondents whether they are in favor of the government ignoring shady financial practices from whatever source that will increase your costs and run up the national debt?

“What this poll shows is that consumers don’t want Congress to limit their auto finance options,” said NADA Chairman Ed Tonkin, a dealer from Portland, Ore. “And it should come as no surprise. The public wants Congress to focus on Wall Street bankers, not Main Street auto dealers.

We will see.