House Bill To Protect Dealer Reserves Gets Help From NADA, Dealers

November 24, 2015

I caught a snippet of last week’s debate on C-SPAN around the U.S. House of Representatives bill H.R. 1737. The bill seeks two goals—to roll back the Consumer Financial Protection Bureau’s (CFPB) efforts to limit dealer reserves on finance deals, and require greater public participation as CFPB issues guidance to dealers and lenders.

In the C-SPAN coverage, I was struck by the passion of Rep. Mike Kelly, a Pennsylvania Republican and third generation dealer, who spoke in support of the bill, which passed the House by a 332-96 vote:

“We are a third-generation automobile dealer. I can tell you that it is a people business, not a white person business, not a black person business, not a brown person business, not a red person business, or a yellow person business. It is a business that is done face-to-face. I have sat across the desk from many people, lower income people, who cannot afford to get a car because they don’t have the ability to negotiate the auto loan.

 It is our business, and I am stunned by people who have never done what we have done who have somehow decided that we are racist and that we are overcharging people. We are doing exactly the opposite…Three generations of Kellys have sold over 150,000 cars. You don’t do that by cheating people. You don’t do that by being a racist. You don’t do that by discriminating against people. You do that by working with people….The ability to get these people transportation–private transportation–falls on the shoulders of those who are the dealers. We negotiate in their best interest.

 How stunning to think that somehow we are these predators who are just taking advantage of these poor people who don’t have any financial literacy. That, my friends, ultimately, is the biggest insult you could give people of color or people of gender. It is absolutely incredible to me that we would bring it to this issue.”

The House’s overwhelming support of H.R. 1737 owes in no small part to the work of the National Automobile Dealers Association (NADA). The group has been opposed to CFPB’s efforts to limit dealer reserves since the agency’s initial guidance in 2013.

As H.R. 1737 moves to the Senate, the bill faces an uphill battle to garner enough support to overcome the threat of a veto from President Obama.

I would encourage every dealer and industry stakeholder to do what I’ll do—call your Senators and ask them to support the bill to protect the future of our industry.