UCD Magazine • August 2020 • Washington Update

NIADA is your voice in Washington D.C., advocating for independent dealers, the used vehicle industry and small business. Here’s a look at the latest news and NIADA efforts regarding legislative, regulatory, PAC and grass roots activities.

Paycheck Protection Program: Just hours before the June 30 deadline for small businesses to apply for Paycheck Protection Program loans, the Senate hastily proposed and passed by unanimous consent a bill to extend that deadline to Aug. 8.

The House unanimously passed the PPP Extension Act the next day, and on July 4 it was signed into law by President Trump.

The bill gave businesses more than six extra weeks to get the Small Business Administration’s emergency relief loans, designed to help small businesses keep their employees on the payroll during the COVID-19 pandemic.

Congress appropriated $659 billion for the loans, which can be forgiven if the recipient meets certain conditions – including using at least 60 percent of the funds for payroll.

As of July 6, more than $130 billion of that funding was still available, according to data released by the SBA. The data showed some 4.9 million loans had been approved for a total of about $521 billion. NIADA’s analysis found 18,381 used car dealerships have received PPP loans.

Dealers can download the application form and search for an approved PPP lender on NIADA’s COVID-19 Dealer Resource page at covid19.niada.com.

Another bill involving the PPP – the Paycheck Protection Small Business Forgiveness Act – was introduced in the Senate on June 20 by Sens. Kevin Cramer (R-N.D.), Bob Menendez (D-N.J.), Thom Tillis (R-N.C.) and Kyrsten Sinema (D-Ariz.).

The bill would allow PPP loans of $150,000 or less to be automatically forgiven once the borrower completes a one-page forgiveness document. SBA statistics show that accounts for 86 percent of PPP loans – including 89 percent of those received by used vehicle dealers – but only 26 percent of the funds disbursed.

NIADA is among a large group of trade associations and banks that signed a letter supporting the bill that was sent to members of Congress.

Consumer Financial Protection Bureau: The CFPB’s unprecedented autonomy was dented June 29, when the provision in the law preventing the President from removing its director at will was ruled unconstitutional by the Supreme Court.

In the case of Seila Law v. Consumer Financial Protection Bureau, a 5-4 majority of the justices struck down the rule that the director could only be removed for “inefficiency, neglect of duty or malfeasance in office” as a violation of the separation of powers.

But the court allowed the bureau to continue operating. The plaintiff had sought to invalidate the entire statute that created the CFPB.

While the bureau survived that court challenge, there are other challenges to its structure.

On June 17, Sen. Deb Fischer (R-Neb.) introduced the Financial Product Safety Commission Act, which would replace the CFPB’s director with a bipartisan five-member commission.

NIADA has long advocated for the CFPB to be led by a bipartisan commission, as well as making it more accountable by having its funding subject to congressional appropriations like other agencies. Currently, the CFPB is funded by direct transfers from the Federal Reserve.

The CFPB’s current director, Kathy Kraninger, recently spoke with an NIADA contingent that included CEO Steve Jordan, BHPH Commission chairman Don Griffin of Carhop, commission member Lawrence Meade of Easton Motors in Wisconsin and myself, via conference call.

The conversation – a follow-up to a call two months previously – included a discussion of the unease in the independent used vehicle market, illustrated by Wells Fargo’s recent decision to stop lending through most of its independent dealership customers.

We informed Kraninger about the challenges of independents trying to acquire capital to operate and being able to extend credit to their customers, and discussed the availability and cost of credit in all lending tiers.

USMCA: The United States-Mexico-Canada Agreement, which went into effect July 1, was not meant to restrict the movement of used vehicles between the nations.

That said, the trade deal includes language that could be interpreted as placing tariffs on used vehicles built before USMCA was in effect that are imported into the U.S. from Mexico and Canada.

NIADA joined the National Automobile Dealers Association, the National Auto Auction Association and other auto industry groups in a letter to U.S. Customs and Border Protection pointing out the consequences of such tariffs and urging the agency to continue to treat used vehicle commerce as it was under USMCA’s predecessor, NAFTA – allowing North American used vehicles to remain tariff-free in the North American market.

Oregon: NIADA and Oregon IADA are fighting a proposal by the state’s Department of Motor Vehicles that would brand vehicles as salvage based solely on junk/salvage insurance information from the vehicle’s NMVTIS report.

The rule could have an enormous impact on consumers or dealers who own vehicles that had clean titles but would suddenly lose most of their value – or even be rendered undriveable in Oregon.

The associations submitted comments in opposition to the proposed rule, urging the DMV to consider only state-reported information in the NMVTIS – not the information reported by insurance companies and others, which is neither complete nor conclusive.

When a similar policy was put in place by Ohio’s Bureau of Motor Vehicles in 2018, the state legislature created a committee – which included a representative of Ohio IADA – to study the matter. The committee ultimately declined to put the new policy in place.