TADA Dealers - Media Communication Group

Rob BrazielTADA ChiefExecutive Officer,Legislative AffairsTexasDealers Wage Battleon Financial Regulation Bill in WashingtonTADA, working in conjunction withNADA, made an all out lobbying effortthroughout April and May to removefranchised dealers from the oversight of anew federal regulatory entity over financingoperations. The financial regulation bill, S.3217, being considered by the United StatesSenate at the time provided for the creationof a Bureau of Consumer Financial Protection(BCFP) which would be given virtuallyunlimited power to regulate and rewrite therules on most financial products, includingdealer-assisted financing.Recognizing that a new federal government bureaucracycould only interfere with a sound auto finance model at thefranchised dealer level which provides convenience, competition,and decreases the cost of credit to consumers, SenatorSam Brownback (R-KS) lead the charge to remove franchiseddealers and their dealer assisted financing from coverage underthe BCFP. The Brownback amendment sought to match thelanguage in the House companion bill which excluded franchiseddealers.In late April, TADA Chairman David Alderson, NADADirector Carroll Smith, TADA’s Bill Wolters and Rob Braziel,and Lee Chapman of the NCDA of Greater TarrantCounty, went to Washington to personally lobby SenatorsCornyn and Hutchison to support the Brownback amendment.They were also joined by over 100 dealers representing40 other states.The TADA group visited directly with Senator Cornyn andSenator Hutchison’s office about the importance of removingfranchised dealers and their dealer-assisted financing from theoversight of the new Bureau of Consumer Financial Protection.Since the banks and finance companies that underwriteand service auto loans would be covered by the BCFP, TADAargued that additional regulation of dealers engaged in dealerassistedfinancing would be costly and unnecessary. In addition,Texas dealers are already heavily regulated by the FTC,Federal Reserve, and the Texas Office of the Consumer CreditCommissioner, and nothing in the Brownback amendmentwould have changed that regulatory oversight.TADA also made the case that financialreform should focus on what led to thefinancial collapse in 2008. Auto loans didnot contribute to the collapse and pose nosystemic risk to the financial system. If anything,dealers and their customers had beenthe victims of the financial crisis and the lackof credit brought on by lending and financialtransactions in other areas.The lobby team in Washington was extremelyencouraged by the response fromboth Texas Senators who agreed that fran-chised dealers should not be covered. Both pledged to do all theycould to remove franchised dealers from the bill.At the same time, the Obama Administration was making everyeffort to keep franchised dealers under the BCFP by defeatingthe Brownback amendment. These efforts included presidentialstatements and personal calls from the President to members ofthe Senate. The Administration also enlisted the military tocharge that dealers, including franchised dealers, were a threat tomilitary readiness by their dealings with those in uniform. Therewere outrageous charges, and the Administration deliberatelycontinued to fail to make the distinction between independentbuy-here pay-here dealers, who would be covered by the BCFP,and franchised dealers with dealer assisted financing who wouldbe excluded by the Brownback amendment.The Administration and their allies in the Senate were successfulin preventing a direct Senate vote on the Brownbackamendment, but the Senate did successfully vote to instructthe Senate conferees on the bill to accept the House positionof excluding franchised automobile dealers and their dealerassisted financing from new federal regulatory oversight.The vote was 60-30 in the Senate, with Senators Cornyn andHutchison voting to support the TADA/NADA position. Thebill now moves to conference where the House/Senate confereeswill make the final decision on the issue. A final resolutionis expected by the July 4 recess, and TADA will continue thefight to preserve and protect dealer-assisted financing fromregulatory strictures which could decrease convenience andcompetition and ultimately harm the same consumers theAdministration thinks they are protecting. 2010 SUMMER 15