【正文】 外文題目： AUTO RACE TO THE BOTTOM: Free Markets and Consumer Protection in Auto Finance 出 處： Research Note November 16, 2020 作 者： Raj Date and Brian Reed 原 文： AUTO RACE TO THE BOTTOM: Free Markets and Consumer Protection in Auto Finance Raj Date and Brian Reed Introduction Over the past several months, the Federal Reserve, Congress, and the Administration have been considering ways to strengthen and rationalize consumer protection in financial services. Central to that debate is the proposed creation of a new agency focused exclusively on this issue, the Consumer Financial Protection Agency (the “CFPA”). Despite pronounce industry opposition, a consensus appears to be developing among policymakers that the proliferation of dubiously structured and marketed consumer financial products helped fuel an unsustainable bubble in credit and asset values prior to the financial crisis, and visited widespread distress among households thereafter. Proponents of the CFPA argue that it would help prevent similar problems in the future. Even among proponents, however, there are varying conceptions of the scope and function of the CFPA. One of the most significant variations is in the treatment of auto finance. Specifically, the CFPA as envisioned by the House Financial Services Committee would exclude auto dealers from the CFPA’s coverage. The Administration’s original proposal would have included them. This research note does not address the issue of whether the CFPA itself is advisable. Instead, it is meant to inform debate on, assuming there is a CFPA, whether auto dealers should be included in its mandate. In particular, it (a) summarizes the structure of the auto finance industry, and the role of dealers within it。 (b) identifies the analytical premises for excluding financial services activities from the CFPA’s scope。 (c) evaluates, in light of that analytical framework, whether dealers should be exempted。 and (d) highlights the likely petitive implications in the industry if the exemption bees law. Executive Summary The exemption of auto dealers from the CFPA is conceptually flawed. It is logically discordant with the basic premises underpinning the CFPA。 it further fuels longterm instability in . financial services by discriminating against munity banks and credit unions。 it intervenes with the free market in a way that is both distorting and inequitable. Notably, analysis of the dealer exemption need not even first evaluate whether the CFPA itself is advisable. One need only acknowledge that, if Congress ultimately chooses to create the CFPA, it will be because it believes (1) that consumer protection is a materially important objective in financial services。 (2) that prehensive rulemaking will prevent problematic opportunities for regulatory arbitrage。 and (3) that centralized supervision of consumer protection is more effective than a decentralized approach that is tied to prudential regulation. Those logical premises are clearly relevant to auto dealers’ financing activities. Dealers are not a niche part of an immaterial market。 they are the single largest channel (with 79% market share) in the origination of auto loans and leases, a business that (at more than $850 billion in out standings) is larger than the entire credit card industry. Moreover, auto finance is demonstrably susceptible to unfair and deceptive practices, and those practices are demonstrably not held in check by private market forces alone. Intentionally creating a fragmented approach to regulation in auto finance one set of rules for auto dealers, another set for banks and credit unions – would invite the kind of “race to the bottom” in consumer practices that was manifest during the credit bubble. At the same time, the exemption discourages a “race to the top”: by granting the dominant players in the business a specially permissive regulatory regime, policymakers would tilt the field against more customerfriendly business models, principally at munity banks and credit unions. The exemption would also encourage long term instability in the market’s structure. The auto finance market consists of two basic distribution channels: the dealer (or “indirect”) channel, which is generally funded by a handful of large national banks and Wall Street capital markets platforms。 and the retail (or “direct”) channel, which generally consists of credit unions and munity and regional banks. By artificially distorting the auto finance market in favor of the dealers’ distribution channel, the exemption encourages the primacy of Wall Street funding sources over traditional bank deposit funding. As evidenced by the crisis, intentionally chasing businesses from traditional banks and credit unions into Wall Street funding models creates the real potential for disruptive volatility over time. Auto Finance Primer Auto finance is big business in the United States. Although American households’ credit obligations are dominated by mortgage and home