You Auto Know Better...

Not too difficult to spot the political, legal, and regulatory storm closing fast on the indirect auto lending business. 

Blocked by Congress from directly regulating consumer auto sales and finance, the CFPB has decided to try and regulate the auto market indirectly. 

Credit unions, participating in indirect lending with auto dealers, are bullseye-dead center of the on-rushing threat. By its nature, indirect auto lending by credit unions has always been a reputational embarrassment waiting to happen.  Well, get ready for "happen"....!! 

Trades will be up against a wall....

Credit union trade associations, too, cannot avoid the upcoming debate on indirect auto lending.  The typical stand pat, try-to-please-all position on this issue just won't get it this time around. ("Indifferent", "not-on-the-ball" regulators might also consider their looming public and Congressional profile dilemma!)

Baby birds and tomcats?

There is nothing inherently wrong with dealer, captive, or indirect auto lending. All have their roles.  There is something wrong with credit unions which knowingly feed "baby bird" members to "tomcat" car dealers. 

What has inspired some credit union managers to confuse the limitless promise of credit unions with the limitless promises of car dealers?

A "necessary evil" in the member-driven marketplace is the pretense most often pressed into service for explanation.  Shaky logic, pragmatic ethics, and "false choices", though, cannot hide the dead fish of consumer exploitation, hiding underneath all the smoke-and-mirrors, "we're here-to-serve" camouflage. 

Cashing in ...

A choice of profits over principles seems, in truth, to be the driving force behind the continued rapid growth in indirect lending.  Indirect auto lending is a blunder, famously wrong, for member-owned, not-for-profit financial institutions.  Credit unions making indirect auto loans have taken on an unreliable friend.  These "innovative" lenders have waded out, well beyond our depth, where the water can  become dark, cold, and perhaps ( guess we'll find out very shortly!) extremely unforgiving. 

An indirect "sales" force...

Reputational recklessness eventually demands a price.  As the CFPB moves forward on indirect auto lending, the only question will be whether or not the sordid tactics of indirect auto lending will take us all down in the eyes of the public and Congress, after the CFPB takes the "consumers are sheep, made to be fleeced crowd" out to the front page woodshed.

Your "substance"
is on fire...

Surely we all agree that substance is far more important than form.  There really is little difference in form between a credit union, a bank, and a predatory usurer.  What truly distinguishes credit unions from our rivals is our commitment to human and social values.  Consumer fairness should be the bedrock value of that commitment.

The high ground is of priceless strategic value.