Senate Instructs Leaders to Include Dealer Exemption in Final Bill Language, BHPH Dealer Regulation Remains in Question
WASHINGTON, D.C. — The Senate voted its approval on Sen. Sam Brownback's motion on Monday, instructing its leaders to include language that exempts dealers from financial consumer protection agency oversight in the final language of the Wall Street reform bill.
While this is good news for many dealers, what remains in question is how buy-here, pay-here dealers will be impacted by reform.
BHPH dealers should take a "wait and see approach," Ken Shilson, founder of the National Alliance of Buy-Here, Pay-Here Dealers, told Auto Remarketing this morning.
He pointed out that the White House administration has been attacking anything to do with alternative financial services, such as payday loans and title pawns, and that BHPH dealers have been lumped into that group.
Basically, Shilson indicated that regardless of what happens in Congress, that alternative financial services are going to face some challenges in the future. In fact, he sees the subprime mortgage sector receiving the first wave of attention and that it will take a while to see exactly how BHPH dealers are impacted.
"We don't represent payday loans. We're not hammering consumers' paychecks. Just because we are loaning out to people who can't get bank credit is why we are in that bucket (alternative financial services). But we don't work like that," Shilson explained.
So ultimately, Shilson said it could take years to find out what impact financial reform will have on the BHPH dealer segment of the auto industry.
By and large, however, the Senate's support of the Brownback motion is good news for dealers. The motion instructs conferees to accept the House of Representatives' Campbell Amendment, which exempts dealers from new financial oversight.
Senate and House leaders are expected to meet soon to work out their differences and decide upon the final language of the reform bill.
The American International Automobile Dealers Association reacted strongly to the news.
"AIADA is pleased to have an overwhelming bipartisan majority of the Senate on record supporting auto dealers," explained AIADA president Cody Lusk. "We also recognize that the true battle lies ahead, and will take place behind closed conference doors. All eyes are now on the conferees and we are hopeful they will accept the language of the House of Representatives, the instructions of the Senate and the wishes of their own constituents and exempt dealers from the final financial reform bill.
"Dealers are already heavily regulated at the state and federal levels. More and redundant oversight will needlessly strain these small businesses and prevent them from offering financing options to customers," he continued.
AIADA has worked for months to include dealer exemption in finance reform.
Dealers are now encouraged to reach out to conference members to remind them that their small businesses played no part in the financial downturn and should not be targeted in a bill aimed at reforming Wall Street banks, according to AIADA.
Meanwhile, the National Automobile Dealers Association also released a statement.
"The Senate clearly supports not including Main Street auto dealers in the Wall Street reform bill," said NADA president Phil Brady. "Dealers across the country are pleased that both the Senate and House are now on record supporting language which is pro-consumer and preserves dealer-assisted financing as an affordable, convenient and competitive source of credit.
"Senators clearly understand that dealers are not lenders — they do not underwrite, fund or service auto loans. They also realize that jurisdiction of the Bureau of Consumer Financial Protection over auto dealers is unnecessary because dealers are already effectively regulated by the Federal Reserve, the Federal Trade Commission and state agencies," he continued.
Brady said his group applauds Sen. Brownback's leadership and is now urging the House-Senate conferees to retain language which preserves auto dealers' ability to provide affordable financing options in the final bill.
"NADA would also like to thank all the many dealers and their employees around the country that made their voices heard on such an important issue. This was a vote in favor of consumers and Main Street businesses," Brady concluded.