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Inside this issue
Lenders Want Direct CFPB Answer on Auto Loans
NADA-TV: General Motors CEO Mary Barra Headlines Automotive Forum in New York
GM's Barra: 'We Know the World is Watching'
GM Adds Team to Focus on Safety During Car Development
Bling King: 2015 Cadillac Escalade
Click here for more auto industry news at NADAFrontPage.com. .
Top Stories
Lenders Want Direct CFPB Answer on Auto Loans

As lawmakers continue to seek details from the Consumer Financial Protection Bureau about how it identifies discrimination in indirect auto lending, banks have another pressing question: how should they compensate dealers in the meantime? The bureau is scrutinizing how banks compensate auto dealers who arrange financing on their behalf for consumers, warning lenders that they could be liable for discrimination if they give dealers the discretion to mark up interest rates and the result is borrowers are treated differently based on race or other factors. But the industry says it still doesn’t know what type of compensation would satisfy CFPB and other federal officials, short of limiting dealer payments to flat fees — something Director Richard Cordray says the bureau is not trying to mandate.

Part of the problem, both the banking and auto industries say, is that the bureau looks at a lender’s entire portfolio of auto loans, from all of the dealers in its network, for statistical evidence that a group of borrowers is being discriminated against — a tactic known as disparate impact. “So an individual dealer would have no issue, but once you put the dealers together in a portfolio, you can find, through statistical models, disparate impact,” Bill Demchak, the CEO of PNC Bank, said in an interview with reporters last week. Instead, the industry is looking for a cheaper alternative to what CFPB has essentially demanded — that banks keep much closer tabs on the dealers with whom they do business to make sure certain groups of borrowers aren’t being charged higher prices. The auto dealers themselves have offered a potential solution and gotten mixed feedback from federal officials.

The National Auto Dealers Association unveiled a model dealer pricing program earlier this year — modeled after Justice Department settlements with two Pennsylvania auto dealers — that the group says would limit the kind of discretion that can lead to discrimination. Under the NADA proposal, dealers would impose a standard markup rate, then adjust the rate downward only in certain documented circumstances, such as if the consumer came in with a better rate from a competitor.

Jean Noonan, a partner with the law firm Hudson Cook who moderated the auto lending panel with Gelfond and Rosenbaum, said many of her bank clients are planning to incorporate the program into their contracts with dealers. Even though the program would still require some compliance monitoring, it’s a much simpler monitoring with a much higher likelihood for success, she said.

For now, Noonan said the NADA program is the best option out there for squeezing discretion out of the pricing in order to reduce monitoring costs. And it still gives the dealers the flexibility they need to keep customers from walking out the door, she said. “The Justice Department loves the NADA solution, and they love it understandably because they are the father of it, or the mother of it,” Noonan said. “Even if the CFPB doesn’t love it, people who adopt it have a lot of protection in my view.”
Source: Politico

Editor's note: To download the NADA Fair Credit Compliance Policy & Program, go to www.nada.org/faircredit.
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NADA-TV: General Motors CEO Mary Barra Headlines Automotive Forum in New York


 

After several weeks of heavy scrutiny, General Motors chief executive Mary Barra was greeted by extraordinary media interest to hear her remarks Tuesday at the 2014 Automotive Forum, sponsored by NADA and J.D. Power, in New York. Barra said she is focused on moving GM forward after the ignition-switch recall, highlighted the company's award-winning vehicles and announced the creation of a global product integrity group. Click here to view the NADA-TV report.
Source: NADA-TV

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GM's Barra: 'We Know the World is Watching'

GM CEO Mary Barra announced that the automaker has created a new global product integrity unit to ensure that a "situation like the ignition-switch recall doesn't happen again." Speaking at the NADA/J.D. Power Automotive Forum in New York City on Tuesday, Barra acknowledged that GM still has a lot to do to repair the damage caused by the botched recall of 2.6 million cars. "We know the world is watching," she said, "and we know we'll be judged by our actions." The automaker acknowledged that it should not have taken a decade for it to recall the affected vehicles, and has suspended two engineers as part of its investigation into the matter. On Tuesday, Barra declined to comment on how many employees might have played a role in the delayed recall. "These are real people with real careers," she said. Barra also said that "trained technicians are working and we are in the process of repairing cars." Speaking of parts now being shipped to dealers she added, "I will tell you they will be perfect parts and 100% tested to be sure of that."
Source: CNN Money
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GM Adds Team to Focus on Safety During Car Development

General Motors Co. Chief Executive Officer Mary Barra, under fire for the company’s slow response to flawed ignition switches linked to 13 deaths, said she is creating a team that will make the company’s cars as safe as they are fun to drive. “This new organization will build on the formula and specific actions we have taken in recent years” to make GM’s cars the best to drive in the industry, Barra said yesterday during an event in advance of the New York International Auto Show that opens to the media today. “We will mirror this approach to focus on safety performance.” The new global product integrity organization will report to Mark Reuss, head of product development, and include the new team headed by Jeff Boyer, the vice president for vehicle safety, she said. Barra spoke at a forum hosted by J.D. Power & Associates and the National Automobile Dealers Association. 
Source: Bloomberg

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Bling King: 2015 Cadillac Escalade

Would it be inappropriate to cruise through genteel Grosse Pointe [Mich.] with the base cranked and Kanye West’s “Wouldn’t You Like To” blaring? Not if you’re blaring it through the Bose sound system of the luxurious 2015 Cadillac Escalade. Is there any luxury vehicle today with a broader buyer demographic than Caddy’s flagship SUV? From West Coast celebrities like Kanye, Jennifer Lopez and Kobe Bryant to well-to-do East Coast families, the Escalade has become synonymous with cool lux.
Source: The Detroit News
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Quotable

"I think it’s a positive and constructive development when a regulated industry decides to step up and craft a fair lending compliance program and try to present it widely and encourage people in the association to use the system."

   
-- Steve Rosenbaum, the chief of the Housing and Civil Enforcement Section of the Justice Department’s civil rights division, commenting on NADA's Fair Credit Compliance Policy & Program, Politico, April 14 

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