"Preconceived notions are the locks on the door to wisdom"- Merry Browne
I think that quote best describes the Consumer Financial Protection Bureau's desire to eradicate the indirect lending model auto lenders use with automobile dealers. They do not care about how this change would affect consumers. The bureau simply wants a flat-fee model.
In March, the CFPB issued a bulletin that holds lenders responsible for unintentional discrimination at the partnering dealership — known as disparate impact. They offered no methodology for how they came to the determination that this was an industry-wide problem.
Interestingly, because an application for an auto loan is not legally allowed to contain information about a borrower's gender or race, regulators must use "proxies" to assume the customer's profile based on trends in surnames and census information. So how do you even determine that discrimination has taken place? It seems like a self-fulfilling prophecy!
NADA continues to fight this fight on behalf of dealers and now the American Financial Services Association (AFSA), a trade association that includes many auto lenders, is launching an independent study into the effects of the indirect lending model on consumers and the auto industry. Their study will include an analysis of the costs and benefits of the status quo vs. changes, such as flat fees, advocated by the bureau.
I think most dealers would welcome a fair, balanced study of whether there is inequity in the system. I don't know any dealers who advocate discrimination based on race, religion, sex or any other type of profiling.
The study also needs to look at whether costs to the consumer may, as many have suggested, be raised elsewhere in the business model. NADA has cautioned that the Bureau’s efforts will harm consumers by reducing the competitive benefits of dealer-assisted financing.
Consumers, lenders, dealers and regulators would all be best served by getting ALL the information before making decisions!
How's Your 401K?
I was elected to the NADART board two years ago. Last week I attended a NADART board meeting. There are a lot of great things happening with NADART.
NADART gives auto dealers access to retirement services not available to other businesses. By combining the buying power of thousands of auto dealers across the nation, NADART gives NADA members access to superior fiduciary and leading administrative support, regardless of the size of their business. This “strength-in-numbers” approach is a powerful example of the difference between NADART and other 401(k) providers.
If you are using your local broker because he buys a vehicle from you every 5 years or you are using a large brokerage house that does not afford you the personal care and tailoring of your plan that you need and deserve, you owe it to yourself — and your employees — to discover how NADART can make a difference for you. Go to https://www.nadart.org/WhyWeAreDifferent.aspx for more information.
NADA Convention: 33 Hotels Sold Out; Limited Number of Rooms Available in New Orleans
I hope you are planning to attend the 2014 NADA Convention & Expo in New Orleans. If so, you should register as soon as possible and book one of the few remaining hotel rooms. Thirty-three out of 36 hotels in the NADA convention block are sold out. Only three hotels have rooms available, which are Embassy Suites, Hyatt Regency and Omni Royal Crescent. There are numerous conferences and events scheduled in New Orleans over the same dates as the NADA convention and so hotel rooms are filling up quickly and there’s limited space. The NADA convention runs Jan. 24-27. Dealers and their managers who register by Jan. 16 will receive at $75 discount from the on-site rate. For more information or to register, visit www.nadaconvention.org.