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Inside this issue
Dealerships, Lenders Bolster Compliance Staffs in Face of CFPB Crackdown
NADA Urges OSHA to Recognize Good Body Shop Practices at Silica Dust Hearing
Senators Probing GM Raise Prospect of Criminal Wrongdoing
U.S. Revives Long-Dormant Auto Loan Program
Auto Finance Outlook is Good for 2014, Report Says
Supreme Court Ends Overall Limit on Political Donations
Detroit Police to Work with OnStar to Combat Car Theft
Click here for more auto industry news at NADAFrontPage.com. .
Top Stories
Dealerships, Lenders Bolster Compliance Staffs in Face of CFPB Crackdown

Auto lenders and dealerships are strengthening their compliance staffs as the Consumer Financial Protection Bureau cracks down on lending practices. Lenders are beefing up to monitor dealerships more closely and dealerships are gearing up to face the added scrutiny. “Staffing levels are definitely up” for lenders, said Andy Barksdale, managing director for TruPoint Partners, during a Webinar last week hosted by Royal Media Group. TruPoint is a consulting firm in Charlotte, N.C., that works with financial institutions in compliance.
 
Meanwhile, dealerships are debating whether to add more positions or pile more responsibilities on staffers who are already accountable for compliance, said Paul Metrey, chief regulatory counsel for financial services, privacy and tax at the National Automobile Dealers Association. “Certainly compliance is going to require much more time and attention on the part of management,” he said in a phone interview on Monday. “Whether that means they need to take on additional personnel is up to them.”

The CFPB says dealer discretion in setting dealer reserve is a standing temptation for dealerships to hike rates as high as possible in order to increase their own compensation. Too often, the agency says, higher rates fall disproportionately on legally protected classes of buyers. The CFPB calls that a disparate impact, which constitutes illegal discrimination, even if it's unintentional. NADA counters that it doesn't tolerate discrimination and that dealerships are motivated to use their discretion to keep interest rates as low as possible in order to compete. The CFPB gave auto lenders a choice in March 2013: Switch to a compensation plan in which dealerships have no discretion, such as flat fees; or stick with dealer reserve and adopt much closer and stricter monitoring of loans originated at dealerships to detect any disparate impact on protected borrowers. Lenders have stuck with dealer reserve -- even Ally Financial.

Dealerships are preparing, too. Metrey said NADA can scarcely keep up with demand for training under a Fair Credit Compliance program the agency launched in January. Under the program, dealerships decide on a fixed rate for dealer reserve. The rate is never to be exceeded. The dealership documents any discounts with a “business reason” why the dealership had to deviate from the fixed rate -- for example, to meet or beat a competing rate. The plan is modeled after the settlement in a 2007 Justice Department discrimination case involving dealer reserve.
Source: Automotive News

Editor's note: To download the NADA Fair Credit Compliance Policy & Program, go to www.nada.org/faircredit.
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NADA Urges OSHA to Recognize Good Body Shop Practices at Silica Dust Hearing

Lauren Bailey, manager of state franchise law and regulatory affairs for NADA, testified before the Occupational Safety and Health Administration yesterday on a proposal to crack down on crystalline silica dust. Bailey urged the six-member OSHA panel to recognize that “the use of crystalline silica-free products, dust-reduction work practices and appropriate respiratory protection have served to virtually eliminate significant exposure concerns for dealerships.” Historically, crystalline silica has been found in automotive paints, in body fillers and in abrasive blaster media. If issued as proposed, OSHA’s rule could impose expensive requirements on dealership body shops with little or no benefit to worker health. OSHA commended NADA for its testimony but asked for more data on potential dealership exposures. Body shop managers willing to answer a couple of anonymous questions on body technician work practices are urged to contact NADA Regulatory Affairs at lbailey@nada.org. Click here for NADA’s testimony.
Source: NADA Regulatory Affairs

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Senators Probing GM Raise Prospect of Criminal Wrongdoing

A Senate panel [Wednesday] raised the prospect of criminal prosecution and promised more hearings over General Motors' failure to fix a defective ignition switch, as GM CEO Mary Barra withstood a scolding from lawmakers flummoxed by a lack of answers. Members of the Senate Commerce Committee's consumer protection panel said future hearings will likely seek to question former GM officials who were in charge during the years that the faulty ignition switch -- now tied to 13 deaths -- was left in 2.6 million mid-2000s cars without a recall until February. “I think we need to hear from people who had the key positions at GM who perhaps had knowledge of this,” Sen. Dan Coats, R-Ind., said. Facing a sharply harsher tone than during her testimony before a House panel a day earlier, Barra remained composed while vowing to return to Capitol Hill with answers once GM's investigation is done.
Source: Automotive News
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U.S. Revives Long-Dormant Auto Loan Program

The U.S. Energy Department said Wednesday that it is reviving a long-dormant $25 billion auto loan program and is reaching out to auto suppliers to make new loans. Created by Congress in 2007, the Advanced Technology Vehicle Manufacturing Program hasn't made a new loan since March 2011 and came under scrutiny after two of five companies that received loans halted production. The auto loan program was created to spur the production of more fuel-efficient vehicles. Since 2009, the program awarded $8.4 billion in loans and has about $16 billion in unused funding. Republicans have on several occasions tried to cut some of the unused funding. In an interview, Peter W. Davidson, executive director of the Energy Department's Loan Programs Office, said the department is committed to making new auto loans. “We are definitely open for business,” Davidson said, saying they are open to loan to start-ups in advanced technologies like EVs and natural gas. “We are very eager to re-engage with the (auto) industry and start making loans.”
Source: The Detroit News
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Auto Finance Outlook is Good for 2014, Report Says

The outlook for auto finance this year is “mildly less positive” relative to extraordinarily favorable conditions, according to analysts for NADA Used Car Guide. However, lenders remain eager to lend, and consumers are comfortable with taking on additional debt, the analysts said in a report released Tuesday. “Considering the strength of today's credit environment relative to years past, we believe conditions will begin to become slightly less favorable toward the latter half of the year, as the market transitions from a uniquely positive period to one more in line with historic norms,” the report said.
Source: Automotive News
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Supreme Court Ends Overall Limit on Political Donations

The Supreme Court struck down some caps on political contributions Wednesday, the latest in a string of decisions rolling back campaign-finance regulations that have fundamentally altered how elections are fought. By a 5-4 vote, the court threw out the limit, currently $123,200, on what any individual can give to all federal candidates and political committees over a two-year election cycle. The plurality opinion, by Chief Justice John Roberts, said those caps infringe on First Amendment free-speech rights and aren't justified by the public interest in fighting political corruption. The court left intact limits on how much an individual can give to specific candidates and political committees, including $2,600 per candidate for each primary or general election. Previously, aggregate limits forced donors to choose among party committees and candidates, donating to a select few before bumping up against the $123,200 cap. Meantime, super PACs and some other outside groups have been playing by a different set of rules that allow unlimited donations, sometimes without public disclosure of donors' names.
Source: The Wall Street Journal
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Detroit Police to Work with OnStar to Combat Car Theft

Police in Detroit are working with General Motors' OnStar roadside assistance service to more quickly track down stolen and carjacked vehicles. Chief James Craig says OnStar now can begin tracking cars and trucks after a police officer at the scene verifies the theft has occurred. It streamlines the process that once required car owners to fill out stolen vehicle reports at a police precinct before calling OnStar with the report numbers.
Source: Detroit Free Press
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Quotable

"I appreciate the intense interest by the senators to fully understand what happened and why. I am going to accomplish exactly that, and we will keep Congress informed. Meanwhile, we will continue doing all we can to repair our customers' vehicles and rebuild their trust in GM."

      ---  GM CEO Mary Barra, in a statement following a Congressional hearing regarding the autmaker's recall, WardsAuto, April 2  

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