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Opinion: Stop Wall Street Abuses -- Without Hurting Consumers on Main Street
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Opinion: Stop Wall Street Abuses -- Without Hurting Consumers on Main Street
By Ed Tonkin

Auto dealers are not Wall Street banks and therefore should not be included in the Wall Street reform legislation. Here's why:

  • It would hurt consumers.
  • It would punish dealers.
  • It would be redundant.
Let me explain.

We are all justifiably angry at the big banks and investment firms of Wall Street for bringing the economy close to the brink of collapse. Without question, Wall Street reform is needed. But the financial reform legislation that the Senate is considering goes way beyond Wall Street. The Senate bill, as currently written, includes Main Street auto dealers who had nothing to do with the financial meltdown.

And for what? The fundamental auto lending model is financially strong. The 60-day delinquency rate on auto loans never went above 1% during the financial meltdown. And that's been consistent over the past 10 years. Compare that with residential and commercial real estate loans, which spiked to 7% or more and are still problematic.

Adding more regulatory red tape inevitably will increase the cost of auto credit to the consumer and therefore limit access to credit for those who need it most. This alone will hurt the economic recovery.

Sen. Sam Brownback, R-Kan., has introduced an amendment that strikes the proper balance.

Keep in mind that any dealer, bank, credit union or finance company that actually underwrites an auto loan will be regulated by the proposed consumer protection agency. And we have no problem with that. But those dealers who simply assist customers to find auto financing should not be subject to double regulation.

We also want to be clear that we do not condone, for one second, any abusive behavior by dealers. There's no place for that kind of behavior in our business. But that's already illegal. Dealer-assisted financing is already effectively regulated — and has been for years — at both the federal and state level.

The House got it right. Its members voted overwhelmingly and in a bipartisan fashion not to include Main Street auto dealers as part of Wall Street reform. The Senate should do the same.
Source: USA TODAY

This commentary from NADA Chairman Ed Tonkin appears in today's edition of USA TODAY.

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Quotable
 
"The House got it right. Its members voted overwhelmingly and in a bipartisan fashion not to include Main Street auto dealers as part of Wall Street reform. The Senate should do the same."

    
-- NADA Chairman Ed Tonkin, in a commentary in today's edition of USA TODAY, May 5
Video Highlights
 

Dealers to Senators: We Are Not Banks


CBS Evening News: NADA Chairman Says Dealers Are Not Banks


C-SPAN: Sen. Brownback on Need to Exclude Auto Dealers from Financial Reform

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