Ed Tonkin, chairman of the National Automobile Dealers Association (NADA), issued the following remarks in response to a statement from President Obama on financial reform:

“Sadly, the White House is continuing to issue misleading statements in its efforts to get auto dealers wrongly included in Wall Street reform legislation. Much of what’s included in its latest statement is pure fiction.

“For example:

1. It urges senators not to support the Brownback amendment because financial reform needs to include ‘auto-dealer lenders.’ But the Brownback amendment does not exempt auto-dealer lenders. Any dealer, bank, credit union or other finance company that actually underwrites and funds auto loans would be subject to the proposed consumer protection agency. And we’re absolutely fine with that. What we don’t support is including auto dealers who simply assist customers to find auto financing. These dealers are not banks. They are facilitators. And dealer-assisted financing is already heavily regulated – and should not be subject to double regulation. 

2. The enormous set of consumer protection laws that currently governs dealers will be preserved under the Brownback amendment.  Despite what the Administration suggests, unfair and deceptive practices are currently illegal and would remain so if the Brownback amendment is passed. Moreover, all of the laws that dealers are currently subject to (e.g., Equal Credit Opportunity Act, Truth In Lending Act, Federal Consumer Leasing Act, Fair Credit Reporting Act, Gramm Leach Bliley Act, Federal Trade Commission Act) would still exist and apply to dealers if the Brownback Amendment is approved.[1]

“At the core of the Administration’s attack on dealer-assisted financing is the assertion that dealers routinely place consumers in ‘loans with higher interest rates than the borrower qualifies for.’  This statement is patently false. What’s worse, it manifests either an inability or a refusal on the part of the Administration to recognize how the market, which they claim needs more regulations, actually works.

“Dealer-assisted financing – which is always optional – regularly affords consumers more favorable terms than those available through other sources. Yet, the Administration seeks to subject dealers to an agency which is being directed to create an uneven playing field by declaring off-limits for dealers practices that will be preserved for community banks, credit unions and other direct lenders. 

“For the President, in the statement attributed to him, to malign an entire industry made up of Main Street businesses run by dedicated men and women and their employees is shocking. We urge senators to resist this latest round of scare tactics and vote in favor of the Brownback amendment to preserve affordable auto finance options for consumers.”