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January 21, 2016 FacebookTwitterFlickrRSSSEND TO A FRIENDPRINT
Inside this issue
Ineligible Non-Hispanic Whites Could Get Ally Cash, CFPB Admits
House Republicans Demand CFPB, DOJ Halt Payouts from Ally's Settlement
Free Market Groups: Feds Ignoring Evidence in War on Car Dealers
Fiat Chrysler Runs Short on Time to Fix Emissions Problems in U.S.
NADA Asks for Workforce Study Participation
Obama: ‘I Could Not Be Prouder’ of Auto Industry
Top Stories
Ineligible Non-Hispanic Whites Could Get Ally Cash, CFPB Admits

The Consumer Financial Protection Bureau could be sending payments from Ally Financial’s $80 million settlement fund to non-Hispanic white borrowers because of a potentially unreliable race identification method, the House Financial Services Committee said today. The committee based its statement on internal CFPB documents the committee obtained. The CFPB employed a combined opt-in/opt-out approach in its mailings to potentially affected consumers. Consumers who were more than 50 percent likely to be a minority received a direct mailing that gave them the option of opting out if they are not part of a minority group. If they did not opt out, they were automatically opted in for payment.

The U.S. Department of Justice was firmly against the opt-out mailings, CFPB documents released by the House committee said. The Justice Department was concerned that non-Hispanic white consumers would receive checks unless written verification of eligibility was required. The Justice Department proposed using only opt-in and self-identification methods to prove eligibility for payment. The opt-in approach would send direct mailings and require an opt-in for borrowers who are 40 to 80 percent likely to be a minority. The borrowers would have to opt-in before receiving a check. Other borrowers who claim to be affected would have to self-identify. The Justice Department also considered having all eligible consumers verify their identity under penalty of perjury. Each customer would likely have to confirm that he or she is a minority and provide an Ally account number, vehicle details and loan origination date.
Source: Automotive News

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House Republicans Demand CFPB, DOJ Halt Payouts from Ally's Settlement

House Financial Services Committee Chairman Jeb Hensarling is trying to stop $80 million in payments given to borrowers as part of a controversial auto loan discrimination settlement with Ally Financial until regulators verify the checks were actually given to minorities. The Texas Republican's panel released a second report Wednesday that alleged the Consumer Financial Protection Bureau willfully overestimated consumer harm in the 2013 Ally case.

The report, which quoted internal agency documents that were initially publicized last year by American Banker, showed disagreements between the CFPB and the Department of Justice about how to identify affected minority borrowers since consumers do not have to reveal their race on auto loan applications. The CFPB ultimately opted to cast a wider net of potential claimants without requiring them to verify their ethnicity. But Hensarling said that the agencies must "immediately suspend" distributing the proceeds until borrowers who were contacted can verify they are eligible for settlement funds.
Source: American Banker
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Free Market Groups: Feds Ignoring Evidence in War on Car Dealers

Electric vehicle giant Tesla beefs up lobbying muscle as FTC weighs anti-franchising measures

A coalition of free-market groups accused federal regulators on Tuesday of ignoring evidence that would undermine proposed measures governing automotive sales that stand to enrich a politically-powerful company at consumers’ expense. The coalition, led by Americans for Tax Reform president Grover Norquist, released a letter on Tuesday to coincide with a Federal Trade Commission workshop examining states’ automotive franchising laws, which limit car manufacturers’ abilities to sell vehicles directly. Critics of the laws, including the FTC, say they restrict new market entrants such as luxury electric vehicle manufacturer Tesla, which says its sales would be threatened by the franchise dealer model.

Norquist’s coalition, which includes representatives from four other free-market groups, insists that ending or restricting automotive franchising would actually decrease consumer choice by reducing competition among dealers selling the same car brands. The letter pointed to a March study by the Phoenix Center for Advanced Legal & Economic Public Policy Studies, which found “that intra-brand competition does, in fact, lower new car prices for consumers.” The coalition says the FTC has ignored that study in an effort to protect its anti-franchising position. “In short, the FTC appears to be trying to find a problem in a market where no evidence of a problem exists,” they wrote.
Source: The Washington Free Beacon
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Fiat Chrysler Runs Short on Time to Fix Emissions Problems in U.S.

Fiat Chrysler Automobiles is running short on time to fix its emissions record in the U.S. For the fourth consecutive year, the maker of Ram pickups and Jeep SUVs finished last in a 2014 Environmental Protection Agency ranking of carbon-dioxide emissions among big automakers. And the agency plans to accelerate its CO2 targets sharply beginning next year. To comply, FCA must improve faster than bigger and richer rivals who also are straining to cut emissions. Failing that, it might be forced to stop building some of the light-duty trucks that Bloomberg Intelligence analyst Kevin Tynan says deliver 90 percent of its profit. Or, to keep making them, it could be forced into a merger.
Source: Bloomberg
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NADA Asks for Workforce Study Participation

With a retail workforce topping 1 million employees and the industry poised for sales growth, the National Automobile Dealers Association believes its members now more than ever need to focus on hiring and keeping talented employees. To help franchised dealerships stay competitive, officials are asking for participation in the NADA Dealership Workforce Study. The project is designed to provide the industry's only authoritative analysis of employee compensation, retention and turnover, employee benefits, work schedules and demographics.

NADA explained that dealerships that complete a questionnaire and submit their payroll data will receive two complimentary reports — including comparisons of their dealerships to their peers nationally, regionally and by state as well as by brand. The participation period is open now through April 29. The study will close promptly so that NADA can provide dealers the information they need to adjust pay plans and benefit packages. To begin the process, visit www.nadaworkforcestudy.com. If dealers have any questions, they can send an email to WorkforceStudy@nada.org or call (800) 557-6232.
Source: Auto Remarketing
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Obama: ‘I Could Not Be Prouder’ of Auto Industry

President Barack Obama used his visit to Detroit on Wednesday to spotlight the resurgence of the city and automotive industry, as well as do a bit of car shopping at the North American International Auto Show. “There’s only one Detroit,” he said said during a speech at the United Auto Workers-General Motors Center for Human Resources on the city’s riverfront. “And if you’re looking for the world’s best cars and the workers who make those cars, you need to be in Detroit, Michigan. That’s why I’m here.” The comments came after Obama joked about having to give his presidential limousine, a Cadillac known as “the Beast,” when his final term ends later this year. He said one of the reasons he came to Detroit was because he was in the market for a new vehicle. In response, several UAW members and others in attendance shouted suggestions for union-made cars and trucks that he should purchase. The speech was a culmination of his trip to the Motor City that included lunch at Jolly Pumpkin in the city’s trendy Midtown neighborhood and a walk of the Detroit auto show floor with executives.
Source: The Detroit News
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Quotable
The CFPB’s approach "invites fraud on a massive scale. It defies logic for federal agencies to distribute settlement funds without first verifying the eligibility of prospective recipients, particularly when the Bureau’s case is premised upon a flawed statistical analysis."

   
-- House Financial Services Committee Chairman Jeb Hensarling (R-Texas), on the CFPB's approach to distributing payments from Ally Financial’s $80 million settlement fund, Automotive News, Jan. 20

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