Lawmakers have targeted July 4 as the deadline for passage of the Dodd-Frank Act, a bill meant to prevent a repeat of the financial crisis.
The legislation will create the Consumer Financial Protection Bureau to police lending, impose tough regulations on financial derivatives, and grant the government power to liquidate teetering firms. The bill fails to restructure government-backed mortgage giants Fannie Mae and Freddie Mac.
Also, as expected, dealers were exempted from oversight by the CFPB.
House and Senate members on the conference committee voted along party lines.
I don’t have an exact timeframe, though I’m guessing it will be a couple years before things ramp up.
Thoughts?
I think there can be some fair comparisons made between the payday loan business and the BHPH auto loan business. Personally, I’m not for curtailing either. How else does a segment of the population that, for better or worse, has found themselves in the straits of bad credit. If these to segments of finance are curtailed, will those people cease their borrowing? I think not. “Guido and Tony” from “Break Your Knee Caps” loans will benefit. If I’m going to make loans to risky borrowers, I will set my own rules, thank you very much!
It seems to me that there are certain things that need to be scrutinized in the business of lending to consumers, but a federal one size fits all solution is not called for. Statutes already exist to deal with lending practices on both the federal and state level.
Perhaps securitization needs to be looked at? I’m not aware of any CDOs being attached to auto loan securities. Does anyone know anything about that? I’ve got a real “thing” about CDOs, which in my mind are insurance products. AIG and others did not use the term insurance when they created these “risk hedges” and the appropriate authorities totally missed it. We all know what happened from there…. no reserves to pay claims and no safety net under the system, as with insurance products.
Let’s hope the folks who lobby for the auto industry can gain an ear on this issue.
I got this question from someone: Are all auto dealers exempt or just new car stores? What about buy here pay here dealer stores?
Can someone answer, please?
Thanks for posting that, Joann.
Much appreciated!