No Senators Want to Help Senator Warren Regulate Dealers

We told you in a previous report that Massachusetts Democratic Senator Elizabeth Warren wants to increase government regulation of dealers. Reports indicate Senator Warren has failed to find co-sponsors for her bill that would increase oversight on auto dealers.

According to Politico, Senator Warren has approached fellow democratic senators Chuck Shumer, Mark Warner and Heidi HeitKamp about co-sponsoring the bill without success. Jared Allen, spokesman for NADA, told Politico that Sentator Warren is drumming up an old issue. Allen told Politico, “This was settled five years ago by a broad bipartisan consensus in both the House and Senate, so it’s not surprising that there’s virtually no interest in Congress for relitigating Dodd-Frank, particularly when there’s no substantive rationale for doing so.”

Senator Elizabeth Warren made headlines for a speech she gave in which she launched the accusation that consumers would save $26 billion on so-called dealer mark-up if regulation were in place. The problem is, her numbers were wrong. Glen Kessler, writer for The Washington Post researched claims by Senator Warren and found a few problems. During Senator Warren’s speech, she tossed out the figure of $26 billion. This would lead the nation to believe dealers were somehow taking $26 billion in extra unnecessary money from the hands of needy consumers. The data that caused the Democratic Senator to reach that $26 billion figure was from 2009 and it wasn’t reliable. Her data was unreliable because

• Her data came from the subprime loan market, in 2009

• The subprime auto lending sector comprised one-fifth of the industry in 2009, but she applied it to the entire industry in 2015

• The data was inconsistent, using only one of the top 20 auto lenders from 2009

What made the data in the speech even worse was that it didn’t match other data sets from that time period. The data used by Senator Warren came from the Consumers for Responsible Lending report from 2009, however, data from the National Automotive Finance Association from the same year didn’t match up with the CRL report. Specifically the CRL report indicated that :

• The average used vehicle “mark-up” for 09 was $780, when the NAF report indicated that figure was $280

• The average new vehicle “mark-up” for 2009 was $494 in the CRL report and $494 in the NAF report

• The overall vehicle “mark-up” average was listed by the CRL report as $714 and the NAF as $330

Thus data from the subprime auto loan market didn’t match data from reliable sources from that year. As we told you before, following the NAF data, the dealer “mark-up” from the subprime market in 09′ would be $11.6 billion, not nearly $26 billion. Even so, those numbers don’t take into account the costs that dealers may charge to provide loans to local financing companies outside of any reserve.

It’s been six weeks and Senator Warren seems low on support and low on credibility in her attempt to increase dealership regulation using her platform and heavily shuffled numbers. The question is, will her attempt to put the watchful regulatory eye of the federal government squarely over dealers prove to be successful?