Auto Dealers Tell Senators: ‘Wall Street Reform Bill Hurts Consumers, Local Dealerships and Economic Recovery’
WASHINGTON (April 27, 2010) - More than 100 new-car dealers are in Washington today to take a message directly to their Senators: Over-regulating auto dealers, imposing new fees and other burdens will have “unintended consequences” of curbing access to credit for middle-class families that need to buy a car or truck to get to work. It will also slow the economic recovery.
At issue is whether dealers should be included under a new super bureaucracy whose purpose is to regulate lending. Dealers are responding by making it clear that they aren't banks but connect car buyers with willing lenders; moreover, dealers had nothing to do with the problems caused by Wall Street and big banks.
“Shouldn't the Wall Street reform bill focus on those who were responsible for last year's credit fiasco?” said Ed Tonkin, an Oregon dealer and chairman of the National Automobile Dealers Association (NADA). “We were the victims of that crisis, not the cause.”
With the Senate now considering an overhaul of the nation's financial system following last year's credit melt down, a significant concern for Tonkin is the broad power given to a proposed Bureau of Consumer Financial Protection (BCFP).
The dealers were in the nation's capital to show support for an amendment to the Wall Street reform bill offered by Sen. Sam Brownback, R-Kan. The amendment would scale back the bureau to only cover those who actually make loans. Auto lenders such as banks, automaker's finance companies and credit unions would still be covered under the new agency.
There are more than 18,400 new-car and -truck dealers in the United States. Dealerships are small businesses that make investments in their communities by hiring local workers, paying taxes and giving Americans the ability to get to and from their jobs.
“Dealer-assisted financing is simply a way to provide one-stop shopping for customers and offer them a better deal than they would get from going bank to bank,” Tonkin said. “Last week I was able to get a family in a car simply because my dealership has relationships with more than a dozen lenders who were willing to extend credit even though they didn't have a stellar credit history.”
“The agency would have almost limitless authority to tell dealers how to run their finance operations and to impose unnecessary new hurdles to getting consumers the credit they need,” he said.
Tonkin added that a there are already strict state and federal laws in place which seek to stamp out discrimination, protect people's privacy and prevent abusive business practices.
“These same regulations will remain under the Brownback Amendment,” Tonkin said. “What's more, all the banks, finance companies and credit unions that actually make car loans will have to comply with the rules of the BCFP.”
“With too many unnecessary rules and restrictions, dealers might simply give up providing on-site financing options and who does that hurt? The average Joe and Jane Car-Buyer,” Tonkin said. “This is just one of the unintended consequences that many fail to recognize.”