AFSA’s Stinebert Briefs Automotive Media in Detroit
Chris Stinebert, President and CEO of the American Financial Services Association (AFSA), this week provided updates to several major news media outlets on what is happening in Washington with respect to regulation and legislation affecting the automotive finance industry.
Stinebert met separately on Monday with the Detroit bureau chiefs of The Wall Street Journal, Bloomberg News and the editorial board of the auto industry’s premier trade publication Automotive News at its Crain Communications headquarters in downtown Detroit.
Without going into details on specific companies, Stinebert generally discussed the impact of enforcement actions leveled against AFSA’s member companies to date by the Consumer Financial Protection Bureau (CFPB) and the negative impact those actions are having on the industry.
“These one-off enforcement actions against certain companies with respect to dealer reserve, rather than rulemaking from the CFPB that the entire industry can follow is disruptive to consumers, not to mention those companies,” Stinebert said.
He said the enforcement actions and the resulting multi-million dollar fines against finance companies and banks are the CFPB’s attempt to “tip the market” by going after some larger players first.
“But because there are so many indirect lenders in the industry, making the industry so fragmented, other companies are not changing their business models based on the enforcement actions against a small fraction of the market,” he said.
He said this method is an attempt by the CFPB to establish “rulemaking by enforcement” rather than establishing a universal rule that dealers and financial services providers can follow.
AFSA has nearly 100 member companies comprising nearly 85 percent of the auto finance industry’s volume, he added. That membership consists of captive auto finance companies which are aligned to the auto manufacturers, national and regional banks, plus independent auto finance companies across the U.S.
Stinebert gave an update on the bill known as HR 1737: “Reforming the CFPB Indirect Auto Financial Guidance Act,” which the U.S. House of Representatives passed on November 18 with a convincing bi-partisan supermajority of 332-96.
The bill would roll back the CFPB’s March 2013 bulletin covering indirect auto finance. The legislation would require the CFPB to:
- Engage in public notice and comment period before reissuing any guidance “primarily related to indirect auto financing;”
- Make publicly available all information that the bureau relies upon to prepare such guidance;
- Consult with sister agencies, and;
- Study the costs and impacts of the bureau’s policy on consumers and small businesses.
Stinebert said the bill would need 60 votes in the Senate to reach President Obama’s desk and 67 votes to override a potential presidential veto. The Administration, he said, is on the record as opposing the bill.
“Finding Democratic sponsors will require senators with the conviction and fortitude to stand up to the opposition and do what is right for consumers and dealers in communities all across the United States,” Stinebert said.
AFSA, celebrating its 100th anniversary this year, will host its 20th Annual Vehicle Finance Conference and Expo March 29-31 at Caesar’s Palace, Las Vegas. There is still time to register at vehicle.afsaonline.org.
March 10th, 2016 by Dan Bucherer