【正文】 sinesses. Indeed, even GMAC, which has been the beneficiary of serial taxpayer capital infusions, as well as the conversion into a bank holding pany charter in 2020, remains reliant on Wall Street funding today. (See Figure 4). By contrast, because the most significant lenders in the direct channel tend to be credit unions and smaller banks, the funding model for direct auto loans tends to rely more heavily on traditional deposits than on the capital markets. Most small banks and credit unions lack the scale to reliably access the assetbacked markets, and simply selling whole loans to Wall Street (so that they might be packaged with other small banks’ loans and securitized) is problematic as well, because it would typically require severing an ongoing servicing relationship with an existing, multiproduct customer. Impact of the Bubble and Crisis Not surprisingly, auto lending has suffered mightily since the onset of the credit crisis. Credit deterioration has afflicted both prime and subprime auto loans. (See Figure 5). Like other consumer lending categories, subprime constitutes a meaningful ponent of overall auto lending, and a greater ponent of industry profitability. But unlike in mortgage, the auto finance industry did not particularly expand its level of subprime borrowing during the course of the bubble. The fraction of overall lending attributable to subprime remained roughly constant: approximately 20% of loans to borrowers below FICO 660. This is an intuitive result: for lowerine Americans, in most parts of the country, car ownership is often a practical requirement to mute to and from work. Unlike subprime homeownership, subprime car ownership was not a onetime luxury transformed into an attainable “necessity” by the availability of easy credit. Rather, subprime car ownership has actually been a necessity, not a luxury, all along. Other underwriting criteria, however, did slip including loantovalue ratios and, especially, the length of loan terms. (See Figure 6). Cars, of course, depreciate quickly over time. Because older cars are worth a good deal less than newer cars, when a borrower defaults near the end of a long loan term, the resale value of the repossessed vehicle is typically significantly less than the unpaid principal balance owed. Lower recoveries on repossessed cars, in turn, mean worse loss severities, and, therefore, higher credit losses. Beyond the credit deterioration of existing portfolios, the bubbleera’s widespread availability of permissive LTVs and loan terms had a second, more subtle, and potentially more corrosive effect. By temporarily boosting auto dealers’ sales volume, and especially their lending profitability, the credit bubble may well have forestalled actual structural change within the auto dealer sector. At first glance, it would appear that, for years, auto dealers were able to defy free market gravity. The industry suffered a 200basis point decline in new car gross margins over the past 10 years. This would seem crippling, given that selling cars is a brutally thinmargin business, and dealerships tend to run only 150basis point pretax profit margins, even in good times. And yet, somehow, dealerships remained remarkably profitable running profits at 2025% of worth throughout their industry’s topline collapse. Dealerships even turned a profit during the otherwise calamitous 2020. (See Figure 7). The explanation for this otherworldly performance is actually quite simple: As gross margins in the auto sales business deteriorated over the past decade, auto dealers managed to dramatically increase their sales of highmargin consumer loans, service contracts, and other profitable ancillary services. (See Figure 8). By the end of the credit bubble, in other words, the financial viability of American auto dealers had bee critically dependent on serving as a financial middleman, marking up loans between moneylosing captive finance panies on the one hand, and their increasingly cash strapped and wary customers on the other. Over the course of the bubble, auto dealerships employers of more than 1 million Americans had managed to steer themselves into a strategic and financial dead end. Evaluating the CFPA Exemption for Auto Dealers It is within that industry context that the House Financial Services Committee voted to exclude auto dealers from the CFPA’s rulemaking and enforcement scope. And it is within that industry context that the wisdom of the exemption should be gauged. Notably, evaluating the wisdom of the dealer exemption (or any other exemption, for that matter) need not first determine whether the CFPA itself is a good or bad idea. Because it is an exemption being evaluated, the creation of the CFPA is an assumption of the analysis. And given the lengthy substantive debate among policymakers regarding the CFPA, the logical premises that underpin the assumed creation of the agency are clear. There are three such premises. The CFPA will be enacted if, and only if, Congress decides that: (1) consumer protection is a materially important objective in financial services。 and (3) ce