Donna Zarcone, who is also president and COO of Harley-Davidson Financial Services, Inc. was among the speakers at the opening session for the 14th annual U.S. Finance Industry Conference for Fixed-Income Investors held in May.

Remarks by Donna Zarcone
AFSA Industry Investors Conference
Tuesday, May 11, 2004
Washington, D.C.

Thank you, Dave. And good afternoon, Ladies and Gentlemen. On behalf of AFSA, let me also welcome you to the 14th Annual Finance Industry Investors Conference. This conference brings back fond memories because, for many years, I served on the advisory board—and I even had Dave's job at one point! I know that he and the other advisory board members put in many hours to assemble a top-quality program—and from the looks of things, they've succeeded. My congratulations to this year's advisory board for its great work.

One of the things I enjoy most about my role as AFSA's chair is the opportunity to recognize member company executives who have gone "above and beyond" to help the association and the industry. One such executive is with us this afternoon—Mr. Robert B. Zane.

I know Bob is well known among this group and really needs no introduction, but I'd like to tell you about him anyway. After a long and distinguished career with GMAC Financial Services, he retired recently from his position as Director of Investor Relations. He is a past chairman of both this conference and the AFSA European Investors Conference—and as a "founding father" of the European meeting, I sure he's proud to see how successful it's become. The fourth conference took place just two weeks ago in Amsterdam and had a very strong attendance.

If all that weren't enough, Bob is a past recipient of AFSA's Distinguished Service Award, the highest honor given by the financial services industry. Now Bob is a man of many talents and is well known for his great repertoire of jokes. With his recent retirement one month ago, I asked him about his plans. He has a three-year backlog of "Honey-Do's" including painting, garage cleaning, mulching and miscellaneous yard work. Give him another month, and he should be available for consulting assignments.

Seriously, Bob, in recognition of your many accomplishments, I'm pleased to present you with an AFSA Appreciation Award. Will you please join me here on the stage? (presents award)

Bob, thank you for all that you've done for AFSA and this conference. Ladies and gentlemen, please join me again in congratulating Bob Zane.

Each year, we have new people attending this meeting, so let me take a minute to tell you about the American Financial Services Association:

AFSA, based here in Washington, D.C., is the national trade association for finance companies and other consumer and commercial lenders that raise funds in the capital markets. Membership ranges from the types of large, multinational financial services companies that are here today to independently owned consumer finance companies.

The association has nearly 400 active, commercial, associate and affiliate member companies with over 10,000 offices in the U.S. Active members account for an estimated 25% to 30% of all consumer credit outstanding—That's about $350 Billion.

One of AFSA's activities is to host conferences like this one. But in serving the interests of its members, the association plays many other roles—such as representing us in Congress and in the state capitals, conducting public affairs programs and actively engaging on our behalf in legal and regulatory matters.

In the end, all of these functions have the same objective: to create and maintain a competitive marketplace that allows AFSA member companies to serve their customers effectively.

Now that you have an idea of what AFSA is all about, let me touch upon some key legislative issues and what the association is doing about them.

Whether our business is auto (or motorcycle) financing, credit cards, mortgages or personal loans, all members of AFSA had reason to care about the Fair Credit Reporting Act provisions that were set to expire on January 1 of this year. If these provisions had been allowed to expire, two things would have happened: First, the industry's ability to offer a unified approach to extending credit would have ended. And second, consumers would have had a tougher time acquiring credit.

The financial services industry conveyed its concerns through an aggressive, all-out effort. We emphasized that a uniform credit reporting system is critical if consumers are to continue enjoying the credit choices and convenience they have today.

Fortunately, Congress and the Bush Administration listened. In December, the Fair and Accurate Credit Transaction Act (known as the FACT Act) was signed into law—an important legislative win for AFSA members in all industry segments.

Another area of concern has been allegations of abusive mortgage lending. Of course, AFSA condemns such practices, and we are actively working on consumer education as well as promotion of strong industry standards. However, spurred by consumer activist groups, some states and cities are considering proposals that don't get at the real abuses but do affect credit availability for large numbers of consumers. Many of these proposals are modeled after Georgia's poorly crafted statute, which had to be modified because it resulted in curtailed lending to the very class of consumers it sought to protect, given its problematic provisions for lenders and rating agencies. Unfortunately, many other cities have now leapt into the fray.

AFSA has addressed the current situation in several ways. In the cities, we have filed suits. All of our litigation focuses on one single issue: whether a municipality has the legal authority to supersede state authority and set regulations governing mortgage lending. In New York City, AFSA joined the successful suit brought by Mayor Bloomberg against the City Council on similar grounds. Generally speaking, we've had success in most of our cases—and have deterred many other cities from introducing similar proposals, but many challenges remain.

In addition to mortgage lending legislation and the FACT Act, bankruptcy reform remains a priority, given that personal bankruptcy filings totaled over 1.6 million last year. AFSA is part of the revitalized Coalition for Responsible Bankruptcy Laws, which supports legislation that puts forth a "needs-based approach" to bankruptcy reform. There continues to be bi-partisan support on Capital Hill for this measure—but with the upcoming presidential election and the capricious nature of politics, it remains to be seen whether the legislation can move forward this year.

Before I turn the program back over to Dave, let me briefly mention three other things:

First, AFSA has completed the developmental work on a national standard that will provide guidance on the transmission, storage, service and certification of e-contracts for vehicle finance.

To ensure the standard's acceptance by the investment community, AFSA met with a cross section of capital market participants to get their valuable input. I'd like to thank the many organizations—such as Bear Stearns, Merrill Lynch and Goldman Sachs as well as the rating agencies—Fitch, Moody's and Standard and Poor's—who participated in those meetings.

The standard is now before X9, of the American National Standards Institute for approval. The final vote from ANSI is expected this Friday. Once the standard is final, it will undoubtedly generate enormous cost savings and benefits to member companies and other financial services institutions. The second item I wanted to mention is membership recruitment, which remains a top priority for AFSA. I am pleased to welcome our newest commercial member Caterpillar Financial Services Corporation to this conference. We'll continue to bring new companies into the fold—enabling the association to maintain a strong presence in representing the industry.

Finally, it's worth noting that we are strong proponents of consumer education for both current and future users of financial services. Earlier this year, AFSA's Education Foundation rolled out MoneySKILL, an online personal finance curriculum for high school students. MoneySKILL is off to a good start, with over 300 teachers in 38 states registered to use the program. This is a great program, so I would encourage you to pick up a brochure at the registration desk for more information.

I'm very excited about this year's program and sincerely hope you find the 2004 Finance Industry Investors Conference to be as terrific as I expect it to be. Thank you for coming and enjoy your stay in beautiful Washington, D.C.