Pub. 12 2013-2014 Issue 3

N E W J E R S E Y C O A L I T I O N O F A U T O M O T I V E R E T A I L E R S 7 new jersey auto retailer W W W . N J C A R . O R G NADA and CFPB Take Center Stage in Washington in November Richard Cordray, Director of the Consumer Financial Protection Bureau, provided the agency’s semi-annual report to Congress in testimony to the U.S. Senate Banking Committee on November 12, 2013. During questioning from the Senators, Mr. Cordray admitted that the CFPB needs to provide more transparency on its methodology, but expressed concern about dealers setting auto loan rates. NADA President Peter Welch stressed that many factors outside of race can impact an interest rate such as the amount financed, vehicle class, whether the car is new or used, the size of the down payment, term of the loan, time of the month and automaker sales incentives, etc. Mr. Welch added that without understanding the CFPB’s com- puter modeling, there is no way to determine if their conclusions are reliable. Six of the 22 members on the Senate Banking Committee signed a letter to Mr. Cordray on October 30, 2013 expressing concern about the CFPB’s guidance issued in March 2013 “that could curtail a pro-competitive feature of the indirect vehicle financ- ing market and to request greater transparency for the Bureau’s activity related to this matter.” In March, the CFPB—without public comment or formal rule- making—issued guidance that pressures lenders to compensate dealers arranging financing with f lat fees and eliminate any discretion dealers have to “meet or beat” a competitor. Since then, the CFPB has refused to release any of its research that supports the need to force these changes in auto lending. After multiple bipartisan requests from both the House and Senate, the CFPB admitted recently that there was no analy- sis performed as to how moving to f lat fees will help or harm consumers. In his testimony, Mr. Welch added that con- sumers benef it f rom the current system of dealer-assisted financ- ing because consumers can shop at more than 17, 0 0 0 f r a nc h i s e d new-car dealerships that have the ability to “meet or beat” interest rates offered by their competitors. The current system yields credit that is widely available and competitively priced. NADA Convention Dealers and their managers planning to attend the 2014 NADA Convention & Expo in New Orleans should register as soon as possible and book one of the few remaining hotel rooms. As of the date of publication, 33 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. NADA Director’s MESSAGE | BY MARCY H. MAGUIRE DIRECTOR’S MESSAGE  continued on page 9 NADA Director’s Message