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June 6, 201 1
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Industry Braces for New Agency By Ted Craig
LAS VEGAS – The Consumer Finance Protection Bureau becomes fully functional July 21 and buy-here, pay-here dealers grow more concerned about the new regulator each day. And for good reason. “Buy-here, pay-here dealers are squarely in the target of the CFPB,” said Terrence O’Loughlin, director of compliance for Reynolds & Reynolds. The new bureau was a topic for several panels during the recent National Alliance of Buy-Here, PayHere Dealers conference. The biggest issue remains unresolved – who will lead the agency. Law professor Elizabeth Warren is the CFPB’s architect. However, many watchers consider her too controversial to get approved by Congress. There are a number of ways the Obama administration could proceed. One is to nominate another candidate. A name floated a few times is Sheila Bair, the current chairman of the Federal Deposit Insurance
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Corp. Another option is a recess appointment. That allows the President to name a director while Congress is out of session and that director remains in place until the end of the next session. Finally, there is the potential for a deal to appoint Warren director, but change the structure of the Bureau. The current design calls for a single director to run the agency. Lobbyist Adam Peterman said all other regulators, including the Federal Trade Commission, are overseen by a five-person body. There’s a rumor in D.C. that the Senate may approve Warren to head a more conventional regulator in the style of the FTC. The CFPB will stay have far more power than most regulators because it will have more cash. Almost all government agencies and departments, even the Central Intelligence Agency, have their funding approved by the Congress. The CFPB is guaranteed a steady flow of money from the Federal Reserve without needing the appropriations process. It also raises money through fees and penalties, Peterman said. “We are setting ourselves up for a czar of proportions we’ve never seen in this country,” Peterman said. The size of this issue requires a response from the entire industry, said NABD founder Ken Shilson. Shilson urged attendees to work with all industry groups, such as the National Independent Automobile Dealers Association and the newly formed Community Au t o m o t i v e Finance Association.
Photo by the Associated Press TOO HOT: Elizabeth Warren delivers testimonybefore Congress concerning consumerfinance. The Harvard professor designed the new Consumer Finance Protection Bureau, but she may not lead it.
CFPB Names Directors
The Consumer Finance Protection Bureau recently announced two appointments for senior leadership. Harvard economist Sendhil Mullainathan will serve as assistant director for research. More importantly for the used-car industry, Patrice Ficklin will serve as assistant director for fair lending. Ficklin comes from Harvard Law School, just like Elizabeth Warren, the CFPB’s chief architect. With Ficklin at its head, the Office of Fair Lending will provide oversight and enforcement of federal laws intended to ensure fair, equitable, and nondiscriminatory access to credit for both individuals and communities, Warren said. Ficklin most recently practiced at the civil rights law firm of Relman, Dane & Colfax, advising on civil rights issues arising in lending, employment and housing. Prior to that, Ficklin worked at Fannie Mae, where she provided fair lending, fair housing, and other consumer law advice regarding mortgage products, pricing and servicing. During her tenure at Fannie Mae, she also directed the company’s employee grievance department, conducted internal investigations, designed and implemented a mandatory non-binding arbitration program for employees, directed the corporate ethics program and revamped officer and employee performance review standards. Ficklin specialized in financial institutions regulation, civil litigation, complex corporate transactions, and employment law at the Washington, D.C., law firm of Wilmer, Cutler & Pickering.
IN THIS ISSUE • Manheim shutters six auctions in metro markets. – Page 3
• Kia is basking in the glow of a brighter image. – Page 8
• More consumers are choosing used vehicles. – Page 5
• Dealership staff involved in stolen car ring. – Page 9