There could be another powersports lessor in town if the Dodd-Frank Act is modified, lessening the burden of financial regulation.
Sparta Commercial Services Inc. is considering its options to offer consumer motorcycle leases again, Chief Executive Tony Havens told Powersports Finance.
“There’s an awful lot of regulation, and it’s only gotten worse,” Havens said. “Our newly elected president has made suggestions of relaxing rules, specifically Dodd-Frank.” If the Consumer Financial Protection Bureau lessens regulatory burden — and capital became more readily available — Sparta could look into a consumer leasing model.
The New York-based municipal leasing provider extends leases for local and/or state agencies throughout the country, to finance everything from police motorcycles and cruisers, to EMS equipment and buses.
Prior to the financial crisis, Sparta offered consumer motorcycle leasing — in addition to municipal, Havens said, but halted the consumer side of the business due to the rough economy, and the company’s challenge to obtain credit lines. Shortly after, Sparta founded iMobile Solutions Inc., which offers a wide range of technology products and services, including customized mobile apps and websites for powersports, RV, and auto dealers.
There are certainly differences in regulatory requirements when it comes to consumer versus non-consumer financing, John Redding, partner at Buckley Sandler LLP, told Powersports Finance.
While the CFPB has been focused on auto finance in prior years — and will continue to monitor the space closely — the agency did not include auto finance in a December blog post on its top priorities in 2017, Redding said. However, the CFPB is particularly focused on the small business space this year.
“But when you get to municipal-level leasing, you are no longer dealing with consumer leasing and you are not dealing with what we would consider a small business, so to the extent that a company is engaged in large commercial leasing, then of course the CFPB shouldn’t have the ability to oversee that,” he said. “But certainly with a move into consumer leasing, the CFPB would always have investigative authority, whether or not the company is supervised by them.”
Thanks to its consumer leasing model from years ago, Sparta still has the personnel and software to enable the company to “go into business quickly,” Havens said. “We could brush the cobwebs off our credit decisioning.” Sparta had a “soup to nuts” process in place, which is still accessible, including complete solutions from origination, to servicing, to repossessions and remarketing, he added.
Meanwhile, it is still unclear whether Dodd-Frank will be materially changed. Jay Clayton, President Donald Trump’s nominee for chairman of the Securities and Exchange Commission, said he has no “specific plans to” attack the Obama administration’s financial reform law, Dodd-Frank, according to his Senate confirmation hearing last Thursday.
Prior to his hearing, Clayton was expected to play a key role in the president’s plan to dismantle the financial reform act, according to previous statements. However, he took a more mild stance during the hearing, where he said the law should be looked at to determine whether it is achieving its objectives “effectively.”