Categories
Business Growth Economy

The Rat Race is On!

Mark Rappaport President Simplicity Division EFG Companies
Contributing Author:
Mark Rappaport
President
Sinplicity Division
EFG Companies

In 2016, we all held our breath to see how the presidential race would turn out, with everyone saying that those results would affect the economy. In the aftermath of President Trump’s win, we watched the “North Star” of the health of an economy – the stock markets – and they rose, hopefully signifying good times ahead.

Nevertheless, the heated political atmosphere continued past 2016 and into 2017. Now, you can’t listen to the radio, turn on the T.V., read a newspaper, or open a social media app without seeing articles about the current administration and whether or not it is successful. No matter if you are a Republican or Democrat, Trump or Clinton supporter, if you’re a lender seeing these stories proliferate, it probably gives you pause on whether the economy can weather this storm.

According to the National Automobile Dealers Association (NADA), U.S. new vehicle sales are expected to stay above 17 million in 2017, roughly on par with last year’s levels. On all accounts, it currently looks like we’re still on track to meet those expectations. As a lender, you probably expect to receive roughly the same loan volume as you did last year. However, economic factors like the heated political atmosphere could have lasting repercussions on your loan volume.

Categories
Compliance

The Cost of Compliance

Steve Roennau Vice President Compliance EFG Companies
Contributing Author:
Steve Roennau
Vice President
Compliance
EFG Companies

Since July 2010, the Consumer Financial Protection Bureau (CFPB) has made significant waves in the auto finance space. In 2013, they issued their bulletin titled “Indirect Auto Lending and Compliance with the Equal Opportunity Act” stating that they would regulate lenders on unanticipated discriminatory practices. With very little guidance on how to be compliant, lenders and dealers scrambled to revamp their anti-discrimination practices to little avail.

Between 2013 and 2016, the CFPB filed 13 enforcement actions totaling upwards of $165.17 million against auto financiers, such as:

  • Toyota Motor Credit Corporation
  • Fifth Third Bank
  • American Honda Finance Corporation
  • Wells Fargo Bank, N.A.
  • JPMorgan Chase Bank, N.A.
  • DriveTime Automotive Group
  • First Investors Financial Services Group

Beyond the restitution and civil penalties leveraged against lenders, the increased compliance oversight also had direct impact on dealer profit margins, consumer prices, and the national GDP.

According to a 2014 study of the auto finance regulatory environment by the Center for Automotive Research (CAR), regulations pertaining to employment, accounting and vehicle financing made up more than 63 percent of all estimated federal regulatory compliance costs. The administration of vehicle financing alone accounted for 71 percent of all vehicle finance compliance costs and 26 percent of total dealership compliance costs.

Categories
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Enterprise Financial News Volume 13

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