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8/9/2019 Car Salesmen and Charts 050510[1]
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Car Salesmen, Lobbyists, and ChartsIllustrating the Dangers of the Biased Use of Data
Raj Date
Executive Director, Cambridge Winter Center
May 31, 2010
CAMBRIDGE WINTER CENTERfor Financial Institutions Policy
Copyright 2010 Cambridge Winter Incorporated
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8/9/2019 Car Salesmen and Charts 050510[1]
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Over the past weeks, the politically powerful auto dealer lobby has besieged members of the Senate,
requesting a special exemption from a new consumer protection regulatory framework. Although it is not
especially clear why it is relevant to the debate, the dealers have insisted, through the use of a chart like the
one on the left, that auto credit has been rock-solid through the crisis. The auto dealer lobbys own data,
though, suggests that the opposite is true. The dealers have deliberately chosen to present data in an
unfortunately distorting way to pitch their case to public officials.
Copyright 2010 Cambridge Winter Incorporated
CAR SALESMEN, LOBBYISTS, AND CHARTS
Auto 60+ Day Delinquencies,
4Q04-4Q09Basis points
0
10
20
30
40
50
60
70
80
90
4Q04 2Q05 4Q05 2Q06 4Q06 2Q07 4Q07 2Q08 4Q08 2Q09 4Q09
Auto
Auto 60+ Day Delinquencies,
4Q04-4Q09Basis points
Mortgage and Auto 60+ Day
Delinquencies, 4Q04-4Q09Basis points
Source: National Automobile Dealers Association data; Cambridge Winter Center analysis
0
100
200
300
400
500
600
700
4Q04 2Q05 4Q05 2Q06 4Q06 2Q07 4Q07 2Q08 4Q08 2Q09 4Q09
AutoMortgage
50
60
70
80
90
4Q04 2Q05 4Q05 2Q06 4Q06 2Q07 4Q07 2Q08 4Q08 2Q09 4Q09
Auto
Credit performance data, as presentedby auto dealers lobbyists to U.S.Senators and their staffs . . .
. . . and the same exact data, as it might beportrayed by a similarly cavalier lobbyistmaking the opposite argument . . .
. . . and the same exact data, as it mightbe used by an objective policy analyst.
59%increase
Seasonal peak-to-
peak: 28% increase
Seasonal trough-to-trough: 35% increase
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8/9/2019 Car Salesmen and Charts 050510[1]
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Also central to the auto dealers rhetoric is the notion that they are Main Street stalwarts unconnected to Wall
Street miscreants. Again, reality intrudes. Wall Street funds more than 70% of auto dealer loans. Indeed, the
alliance of Wall Street funding (through the ABS and unsecured markets) provided to auto dealer loans
accounts for more than half of the market.
Copyright 2010 Cambridge Winter Incorporated
CAR SALESMEN AND WALL STREET
Dealer-Originated Loans & Leases,
by Ultimate Funding Source, 2007Percent of dealer originations
Auto Finance Channel
Mix, 2007Percent of loan & lease originations
Source: Federal Reserve; J.D. Power; Cambridge Winter Center analysis
Auto Finance Market, Channel and
Funding Map, 2007Percent of outstandings
14%
7%
6%
16%
57%
Wall Street with Dealers
Banks with Dealers
CUs with Dealers
Banks DirectCUs Direct
0%
10%
20%
30%
40%
50%
60%
70%
80%
Wall Street Banks and thrifts Credit unions
21% 79%
Most of auto loans and leases areoriginated by auto dealers . . .
. . . and most of dealers loans and leases areultimately sold or financed by Wall Street . . .
. . . so it should come as no surprise that thepartnership of Wall Street financing and autodealer loans control more than half the market.
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