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Auto Sales Soar Even as the Rest of the Economy Struggles
Washington Post (01/03/14) Fletcher, Michael A.

Despite an economy that is weighed down with high unemployment and historically lower wages, Americans continue to head to car dealerships. In 2013, 15.6 million new cars and trucks were sold, up 8 percent from 2012. Leases have returned in a strong way as well after drying up in 2009 because of the recession. Accounting for only 12.6 percent of volume at its lowest point, vehicle leases accounted for 23.3 percent of all new vehicle transactions in 2013.

According to analysts, consumers have been purchasing cars due to a wide selection of vehicles, an availability of credit and a growing sense that the wider economy is recovering. In addition, the average age of U.S. automobiles is 12 years, meaning a new car or truck is quickly becoming a necessity for a large portion of the country. Analysts expect a continually strengthening economy to create another landmark year for American auto sales in 2014.

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AFSA NTSF Committee Comments on Georgia Tax Issue

AFSA’s National Title Solutions Forum (NTSF) submitted a comment letter on Jan. 9 to the Georgia Department of Revenue, the Association of Commissioners of Georgia and the state’s tax commissioners in an effort to rectify serious concerns with vehicle ad valorum taxes in the state. State law permits consumers who are registering a vehicle in Georgia for the first time to pay the required taxes in two installments, half at the time of registration and half within 12 months. Unfortunately, the current arrangement often leaves financial institutions responsible for the second half of the tax if they seek to acquire the title.

The letter details NTSF’s suggestions for fixing the statute, including permitting financial institutions to contact county tax commissioners to obtain tax information and to have the ability to satisfy the tax payment on the account.

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AFSA Addresses TCPA Concerns

The Telephone Consumer Protection Act (TCPA) will be the focus of AFSA’s second Compliance Outlook webinar, to be held on Jan. 30 at 3pm EST. Presenters Kelly Lipinski, Member, McGlinchey Stafford; Chuck Gall, Associate, Dreher Tomkies LLP; and Eric Troutman, Member, Severson & Werson; will discuss recent TCPA litigation and the TCPA regulations that went into effect in October 2013.

The TCPA, enacted in 1991, was intended to protect consumers from aggressive telemarketers by placing a variety of restrictions on phone calls, text messages, and faxes to consumers. However, because of certain language in the act, the TCPA affects many ways in which businesses contact their customers. Recently, TCPA litigation has greatly increased because the statute provides for damages of up to $1,500 per violation, which can lead to substantial windfalls for plaintiffs’ attorneys. Most of the recent suits arise out of the TCPA’s prohibition on calls or transmissions using an automatic telephone dialing system. Recent amendments to TCPA regulations by the Federal Communications Commission (FCC) went into effect on Oct. 16, 2013. These rules narrow and eliminate key statutory exemptions.

AFSA has expressed its concerns with the TCPA and its implementing regulations to Congress and the FCC. Mostly recently, AFSA submitted a letter on Jan. 3 to the FCC regarding the Commission’s interpretation of the TCPA. The letter supports a petition filed by Glide Talk, LLC.

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AFSA’s SGA Department Reviews 2013 and Previews 2014

On Jan. 8, AFSA’s State Government Affairs (SGA) Department published its 2014 State Legislative Preview & 2013 Review. This annual paper provides a complete preview of state and some limited federal legislative and regulatory activity in 2014 relating to electronic payment systems, mortgage lending, personal loans and vehicle finance. It also covers key general interest topics such as ancillary products, arbitration, credit reporting, collections and state-level efforts to urge the U.S. Congress to reinstate Glass-Steagall-type restrictions on financial institutions.

The paper also gives a comprehensive overview of hot issues in the states in 2013, including N.Y. regulators’ proposed debt collection regulations, the renewed efforts of activists in Missouri to cap interest rates on short-term loans and a Calif. ballot initiative to prohibit the practice of dealer reserve in vehicle sales. The review also covers municipal developments, including continued passage of lending zoning ordinances, the exploration of the use of eminent domain to seize mortgages by several cities and the continued spread of vacant property registration and upkeep ordinances that may affect financial institutions.

The 2014 State Legislative Preview & 2013 Review is available in the white papers area of the SGA Resources section on the AFSA website and by clicking here.

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Inside the Beltway
Yellen Confirmed as Fed Chief
The Wall Street Journal (01/06/14) Peterson, Kristina and Da Costa, Pedro Nicolaci

On Jan. 6, Janet Yellen was confirmed as the first female Chair of the Federal Reserve Board of Governors by a 56-26 vote. No Democrats opposed her nomination, and 11 Republicans voted for Yellen. She is expected to assume her new post on Feb. 1. Yellen will have many issues to grapple with, including the Fed’s bond buying program, which was recently decreased by $10 billion to $75 billion per month. She also will have to contend with winding down the Fed's easy-money policies as the economy improves, reaching consensus within a divided policy committee, and keeping Congress informed on policy.

Analysts note that Yellen is likely to continue the policies began by outgoing Chair Ben Bernanke, She is likely to face skepticism from Congressional Republicans Democrats, on the other hand, view her as an arbiter of the financial system and believe that she will be a strong influence in keeping the country from dipping back into recession.

Yellen’s first meeting as chair is expected to come in March as the governors gather for their monthly policy meeting.

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FHFA Director Watt Delays Hike in Guarantee Fees
American Banker (01/08/14) Berry, Kate

The new director of the Federal Housing Finance Agency and former Congressman Mel Watt announced on Jan. 8 that he will delay a planned fee hike that would have raised the cost of many home loans backed by the government sponsored enterprises that the agency oversee. The hike was proposed by Watt’s predecessor Ed DeMarco, who now serves as senior deputy director. Watt noted that he will conduct a thorough investigation of the fee to ensure that it will not adversely affect industry at a time when they have to comply with a number of new regulations.

The proposed fee would have increased annual guarantee rates by 10 basis points for mortgages backed by Fannie Mae and Freddie Mac. It also would have eliminated the up-front 25 point fee for adverse markets.

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Senators Want More Info on Big Settlements
PoliticoPRO (01/08/14) Cirilli, Kevin

Following complaints about the limited scope of information released by the Department of Justice and regulators such as the Consumer Financial Protection Bureau (CFPB), Sens. Elizabeth Warren (D-MA) and Tom Coburn (R-OK) have introduced the Truth in Settlements Act, which attempts to force the government to release more information about settlements it reaches with companies.

“Any time an agency decides that an enforcement action is needed, but it is not willing to go to court, that agency should be willing to disclose the key terms and conditions of the agreement,” Warren said. The bill’s introduction comes after an unusually active few months of settlements between government regulators and companies, particularly those alleged to have some connection with the 2008 financial crisis.

Warren and Coburn argue that the settlements dollar figure does not necessarily tell the whole story because settlements tend to include tax breaks and deductions as well. The bill would require the release of this information along with the dollar amount.

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National and State News
Calif. Group Preps Ballot Proposal to Ban Dealer Markup on Interest Rates
Automotive News (01/08/14) Henry, Jim

A group called Consumers for Auto Reliability and Safety (CARS) has taken initial steps to place a ballot proposal on the November 2014 ballot that would prohibit dealerships from using dealer reserve. The group defines the practices as “hidden extra charges.” The group, along with the Consumer Financial Protection Bureau (CFPB) has maintained that dealerships deserve to be compensated for arranging financing for consumers, but both argue that the practice of dealer reserve has flaws. While CARS argues that dealer reserve should be banned all together, the CFPB has not made such an argument.

The proposal also contains other initiatives, including regulating dealerships’ hiring practices when those employees handle consumer’s’ records. The group has four versions of the proposal, two of which contain the dealer markup language. CARS said it will decide which version it wants to use soon. It has until April 18 to gather enough signatures to place the initiative on the November ballot.

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KC’s Micro-loan Program is Giving Small Businesses a Big Boost
The Kansas City Star (01/05/14) Horsley, Lynn

Kansas City and its citizens have become successful partners in the city’s municipal bond micro-loan program. The program, which is administered by St. Louis-based non-profit organization Justine Petersen, is the nation’s fastest growing micro-loan program. Small business owners have been able to take advantage of loans averaging around $12,000 and capped at $50,000 to upgrade equipment, purchase new tools and hire staff. The program was launched in January 2012 and also includes the counties of Jackson, Clay, Cass and Buchanan in Missouri and Johnson, Wyandotte and Miami counties in Kansas.

Many of the loans have been extended into loan income areas of Kansas City on the eastern side of the city, while several others have gone to more established businesses to give them a boost. City officials noted in 2011 that small businesses were having trouble getting small loans from banks so the city approached several government entities, including the Federal Reserve Bank and the Small Business Administration, to help identify a partner for the city.

The city agreed to contribute $110,000 to a loan-loss reserve, and several area banks also agreed to contribute in order to get money flowing within the city. Statistics collected by Justine Petersen state that 92 percent of micro-loans offered by the company in the city survive past the one-year mark.

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Santander Consumer USA Seeks $1.56 Billion in Car Financing IPO
Bloomberg News (01/09/14)

Banco Santander SA’s consumer lending arm will attempt to raise as much as $1.56 billion in an initial public offering, according to Jan. 9 regulatory filing. The company, which offers subprime auto loans and leases in the U.S., will be offering 65.2 million shares between $22 and $24 apiece. Based in Dallas, Santander originates auto loans through dealerships, banks and manufacturers. The company was founded in 1995 and is 65 percent owned by Madrid-based Banco Santander.

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January 9, 2014

Forward To A Colleague

Allied Solutions
Black Book
Carleton, Inc.
GoldPoint Systems
Counselor Library
ParaData Financial
Wells Fargo Preferred Capital
Life of the South
AFSA Newsbriefs

AFSA Newsbriefs is a weekly executive summary of AFSA initiatives and consumer credit articles. AFSA Newsbriefs is free for members. Send an email to newsbriefs@afsamail.org to subscribe.

AFSA's mission is to protect and improve the consumer credit business, maintain a positive public image, and create a legislative climate in which reasonable credit regulation can and will be enacted. The association operates in the public interest, encourages and maintains ethical business practices, supports financial education for consumers of all ages, and provides other assistance in related fields on an as-needed basis.

The American Financial Services Association has provided services to its members for over ninety years. The association's officers, board, and staff are dedicated to continuing this impressive legacy of commitment through the addition of new members and programs, and increasing the quality of existing services.