Senate runoff races poise industry for increased regulation

Yesterday’s events at the U.S. Capitol will likely have lasting effects on consumer sentiment and regulation for the auto finance industry. A day after hundreds of protesters broke into the U.S. Capitol building, multiple auto lenders are joining elected officials in condemning the violence that ensued. Four people are reported dead following the breach. Still, Congress certified President-elect Joe Biden’s win in the early hours of Thursday morning, and the attack has prompted resignations within President Donald Trump’s administration, calls to invoke the 25th Amendment to remove Trump from office, potential impeachment and several statements from political leaders denouncing the protesters’ actions. Wednesday’s events will likely contribute to declining public confidence and economic fallout, Pam Perdue, a regulatory and technology expert who has worked on compliance management with more than 1,600 financial institutions, told Auto Finance News . “Yesterday's events did and will have an ongoing impact on all Americans, and upon our American identity throughout the world,” said Perdue, who has more than three decades of regulatory experience. “When trusted, time-tested and intentionally designed processes of governance — particularly elections — are criticized and maligned in false and unsubstantiated ways, despite ample evidence and the exercise of due process, public confidence is not easily restored.” It’s not yet clear, however, what regulatory actions may come to fruition in the next two weeks, Perdue noted. “I have seen enough volatility to understand that legislative responses almost always follow crisis points. I expect to see that hold true in this case as well,” she told AFN . Democrats won both Georgia runoff races Wednesday, securing a 50/50 partisan split in the U.S. Senate with incoming Vice President Kamala Harris serving as the tie breaker, therefore financial regulation and fiscal policy changes are sure to come, Perdue said. “Our society is poised for major social, political and economic change, and the wins by progressive candidates in Georgia may just be the bellwether that accelerates these changes,” she said. “History demonstrates that when the House of Representatives, Senate and White House are in the control of the same party, the ability to reduce friction in the legislative process results in a greater number of laws finding their way to the president's desk. History also shows us that the early days of this type of platform alignment result are marked by the release of pent-up legislative energy around issues that may have been non-starters in a divided leadership,” Perdue explained. “I can say with confidence that both financial regulation and fiscal policy will undergo changes in the new administration, and that because there is unified control, those changes will happen more rapidly than if there was divided control,” Perdue said. Many legal experts expected a change of leadership at the Consumer Financial Protection Bureau with a Biden victory, with an expanded focus on consumer protections in light of the pandemic. In the short term, a Democrat-controlled Congress could overturn federal agency rules established in recent months with the seldom-used Congressional Review Act (CRA) , said Brian Knight, director of innovation and governance at the Mercatus Center at George Mason University . President Trump used the Act 15 times to roll back or withdraw regulations during his presidency, according to the Trump campaign’s reelection website. Meanwhile, Auto Finance News spoke with auto finance leaders who condemned the events without speculating on their impact to the industry. Dan Berger, chief executive of the National Association of Federally Insured Credit Unions , described the Capitol breach as a “sad moment for our country,” saying in a statement that the “NAFCU believes in the Constitution and tolerance, and the violent chaos on Capitol Hill is attacking the foundations of our democracy.” The Structured Finance Association , a leading trade group in the securitization industry, called the actions “cowardice” in a statement. “We know our Constitution is stronger than this, and we thank our leaders who will soon certify the will of the American people.” Ally Financial leaders, for one, said the events “saddened us all.” “Ally joins the millions of Americans calling for a peaceful transition and path forward based on unity, healing and common purpose. It's the only way our country and our citizens will reach their full potential – together,” Chief Executive Jeffrey Brown told AFN . National Independent Automobile Dealers Association leaders said in a statement that “escalating to violence and destruction is not acceptable. The events at the Capitol crossed the line, endangering lives and the lawful operation of our government. While our members all have their own individual opinions regarding the issues that face our industry and this country, we come together as an association, an industry and a nation to condemn all violence.” In a joint statement, Ford ’s Executive Chairman Bill Ford and Chief Executive Jim Farley said they watched the events unfold Wednesday at the Capitol in “complete disbelief.” Their statement read: “On a day which should be a reaffirmation of one of the most important democratic ideals, the peaceful transition of power stemming from a free and fair election, we saw actions that are the antithesis of those ideals. These problems can and must be resolved.” Toyota leaders issued a statement urging “restraint and patience” during the transfer of power. General Motors , too, issued a statement condemning yesterday’s events. “The peaceful transition of power is a cornerstone of American democracy and, regardless of politics, the violence at the U.S. Capitol does not reflect who we are as a nation,” General Motors’ Chief Executive Mary Barra said via Twitter . “It’s imperative that we come together as a country and reinforce the values and ideals that unite us.” Biden is set to be sworn in as president Jan. 20.

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Senate runoff races poise industry for increased regulation

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