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Inside this issue
New Study Slams CFPB Methodology
Study Challenges Government Lending Disparity Allegations
Obama Nominates NTSB's Mark Rosekind to Lead NHTSA
Automakers Cautious on Broadening Air Bag Recall
Senators Introduce Auto Industry Whistle-Blower Bill
NADA 20 Group Holds First Forum for Multi-Franchise Executives
Click here for more auto industry news at NADAFrontPage.com. .
Top Stories
New Study Slams CFPB Methodology

The statistical method the Consumer Financial Protection Bureau uses to identify which consumers belong to minority groups correctly identified African-American borrowers only 24 percent of the time. That was one of the findings of a nearly yearlong study, released [Wednesday], which was commissioned by the American Financial Services Association, a lender group with offices in Washington. AFSA has been at odds with the CFPB over the bureau's methodology. “From start to finish, this thing is flawed,” AFSA Executive Vice President Bill Himpler told Automotive News. The CFPB's statistical analysis is so inaccurate that the CFPB's conclusions about alleged discrimination in auto loans are also invalid, the lender group said.

The National Automobile Dealers Association strongly endorsed the latest study results in a written statement. “This study shows that CFPB's attempt to upend the auto lending process is insufficiently informed and the victim of flawed assumptions and inadequate peer review,” said Peter Welch, NADA president, in the statement. “Allegations of potential discrimination are explosive -- and certainly should not be made without a reliable foundation in data.” NADA said it expects the new study to add weight to a bill pending in the U.S. House of Representatives, which would rescind the CFPB's 2013 industry guidance.
Source: Automotive News
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Study Challenges Government Lending Disparity Allegations

The American Financial Services Assn. commissioned the study after a regulator's analysis left many people scratching their heads

A study commissioned by the American Financial Services Assn. disputes a federal agency's allegation of racial lending disparities. The study involving more than 8.2 million auto financing contracts says data fails to support the Consumer Financial Protection Bureau's disparity allegations of differences in the amount of dealer reserve charged to minorities and non-minorities. The association's research cites significant bias and high error rates in the proxy methodology the CFPB used in reaching its conclusions last year. “AFSA's results are much lower than what the CFPB alleges as problematic in the marketplace, because the association's study factored in complexities of the automotive market that the CFPB did not consider,” AFSA President and CEO Chris Stinebert says.
Source: WardsAuto
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Obama Nominates NTSB's Mark Rosekind to Lead NHTSA

President Barack Obama nominated transportation expert Mark Rosekind to lead the National Highway Traffic Safety Administration, which has come under heavy criticism this year for a perceived slow response to major recalls and safety concerns. Rosekind, if confirmed by the Senate, would come to NHTSA after spending the past four years as a member of the National Transportation Safety Board, the federal agency that investigates major transportation accidents. NHTSA has been lacking a permanent head since David Strickland resigned from the agency in December 2013.
Source: Reuters
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Automakers Cautious on Broadening Air Bag Recall

Automakers are taking a cautious approach to the National Highway Traffic Safety Administration’s urgent call late Tuesday that it expand its recall of some driver side air bags to a nationwide callback. NHTSA asked Honda Motor Co., Ford Motor Co., Chrysler Group LLC, Mazda Motor Co. and BMW AG to recall an unspecified number of vehicles nationwide. Previously, callbacks had only been ordered in high-humidity states like Florida. The cars have potentially faulty air bag inflators made by Takata that can send metal fragments flying. The five automakers all said Wednesday they were still studying the issue. Honda, Chrysler and Takata executives are to testify before a Senate panel Thursday about the recalls.
Source: The Detroit News

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Senators Introduce Auto Industry Whistle-Blower Bill

Two U.S. senators, including the incoming head of the Commerce Committee, will unveil legislation Thursday to allow auto industry employee whistle-blowers to potentially be paid millions if they reveal hidden dangers. The bill would grant the secretary of transportation the discretion to award whistle-blowers up to 30 percent of the total monetary penalties resulting from Department of Transportation or Department of Justice enforcement actions that total more than $1 million. The bill covers employees or contractors of motor vehicle manufacturers, parts suppliers and dealerships.
Source: The Detroit News
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NADA 20 Group Holds First Forum for Multi-Franchise Executives

NADA 20 Group hosted its first Multi-Franchise Executive Forum last week for owners of dealer groups with five or more rooftops to discuss and share best practices related to issues affecting the performance of their organizations. Hosted by NADA 20 Group's Chip Maher in New York City, November 11 and 12, the Forum attracted capacity participation of 10 dealership groups, with 90 rooftops, representing over 2.8 billion in annual sales dollars and 70,000 units. The 24 participants consisted of dealers, CFOs and CEOs. Among the topics discussed were issues faced by multi-franchise dealer groups related to their corporate structure, human resources, marketing, sales, IT, cash management, operational and legal functions, and future growth.  

“The open interaction by participants on the similar challenges they face operating and managing these larger organizations and structures was outstanding and exactly what we had in mind when we developed this event,” said Maher. Participating in the session was Matt Smith, executive vice president of Laurel Auto Group in Pennsylvania, who noted, “The meeting was a great opportunity to digest the strategies and processes that other groups use to conduct business in their respective parts of the country. While we all experience differences in our own markets, in the end, we all share similar concerns and can learn control tactics from one another to better manage our businesses. I took away several ideas that we can use to improve processes.”

Due to the success of the event, a second Multi-Franchise Executive Forum may be scheduled in the spring of 2015. For more information, contact Chip Maher at cmaher@nada.org.
Source: NADA Dealer Operations
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Quotable

"Allegations of potential discrimination are explosive -- and certainly should not be made without a reliable foundation in data."

    -- NADA President Peter Welch, referring a new comprehensive study of more than 8.2 million loan records by Charles River Associates, Automotive News, Nov. 20

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