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4. On pages 1085 and 1086 Mr. Arnold says that if GMAC were split off from GM and competed across the board "C.I.T. is going to have to meet the GM rates". With this we agree; the only question is at what level of rates will this be?

Mr. Lundell of C.I.T. testified in 1959 that in his opinion if GMAC were divested from GM "discount rates would tend to equalize. It may well be that General Motors would go up $10 and we would go down $10". We believe that GMAC and FMCC rates would go up and the independents' rates would come down somewhat. In fact, our estimates of the increased costs to the consumer are based on such an assumption.

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5. Mr. Arnold states (page 1088) that passage of the Bill "would increase it (GMAC's efficiency) because it is a very inefficient organization . . . This assertion is another exhibition of Mr. Arnold's lack of understanding of the facts and issues in this case.

Testimony of Charles B. Whiteside, Merchant's National Bank, Fort Smith,
Arkansas

1. There is some confusion on pages 1125-1128 concerning
rates to consumers and rates to dealers. The 5.41% men-
tioned by Mr. Whiteside is the statutory maximum rate to
the customer; it would apply both to GMAC and to Mr.
Whiteside's bank.

Our information is that the GMAC new car discount rate to
the dealer is less than 5.41%. Mr. Whiteside, however,
carefully avoids mentioning what his rate to the dealer is.
He does mention, however, that he has never attempted to
get General Motors dealers' business by offering a rate
lower than that charged by GMAC.

2. Mr. Whiteside says that he understands FMCC rates are
equal to the rates of C.I.T. and Commercial Credit in
Oklahoma (pages 1137-1138). If the C.I.T. and CCC discount
rates to Ford dealers are now the same as FMCC's, it is
because they have come down; they were higher before we
entered Oklahoma. This, of course, substantiates our
testimony that the rates of other finance companies
generally have come down in areas where FMCC has opened
branches.

3. Mr. Whiteside presumes that Ford Motor Company is now
harassing its dealers so that FMCC will be able to carry
their wholesale financing (page 1138). We should like to
point out that FMCC must meet the same requirements as
other finance companies in making payments to Ford Motor
Company for purchases by dealers.

Moreover, in the 1959 Hearings (pages 344-345), Mr. Lundell
of C.I.T. mentioned specifically that he considered the
Ford Motor Company operation on wholesale as "one of sim-
plicity and cooperation and trust".

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4. On page 1139 Mr. Whiteside states that "We are not
protesting because of competition as to rates, reserves,
or services rather the lack of it
This is an
interesting complaint in view of Mr. Whiteside's earlier
statements that he has never offered rates lower than
those charged by GMAC in an attempt to get business from
GM dealers.

Testimony of R. L. Mullins, Independent Bankers Association of America

Mr. Mullins repeats in large part the testimony he gave in 1959 (1959 Hearings, pages 287-298) that he and members of the Independent Bankers Association of America are not getting much automobile paper from GMC dealers. This is not surprising when one examines his 1959 testimony and discovers two things: (1) Mr. Mullins' associates are purchasing "practically all retail paper" and he is not even sure they grant any wholesale assistance (page 296), and (2) Mr. Mullins' associates "rarely purchase from the dealer" (Page 294). In other words, he is in competition with the dealers and makes direct loans. It is not at all surprising, therefore, that dealers do not wish to channel business to these banks; they compete with the dealers and are attempting to eliminate the dealer from the transaction.

1. Mr. Mullins confirms our testimony that, where banks
are interested in automobile financing, they generally
offer rates on direct loans to the customer lower than
those charged by finance companies.

2. Mr. Mullins states that his bank's auto financing
business fell off "following the Korean incident (and) we
were never able to get back to our former level". He also
says that "we have practically no automobile financing
except repeat business
(page 1148). On page 1157
he says,
'In recent years, the banks have been getting
fewer and fewer automobile loans on new cars.

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We believe that Mr. Mullins' experience is unique in this
respect. According to Federal Reserve Board data, the
share of consumer auto credit held by banks has increased
steadily from 27.7% in 1939, to 39.4% in 1949, to 45.0% in
1960. Other bankers do not seem to share Mr. Mullins'
plight!

3. Mr. Mullins states that his bank requires liability
insurance in connection with automobile retail financing
(page 1153). FMCC does not require this type of insurance.

4. Mr. Mullins in a confused statement on page 1158
appears to verify that his bank does not pay any reserve
to the dealers. And, apparently he is not at all sure
what GMAC's discount rates and reserves to dealers are.
Yet, he is surprised he does not get more of the dealers'
business!

Testimony of David B. Steere, Allied Finance Company

Mr. Steere's prepared statement is essentially a portion of the American Finance Conference "White Paper on Automobile Financing". His arguments are dealt with in Mr. T. 0. Yntema's prepared statement, pages 23-31.

1. Mr. Steere substantiates our testimony that "the large
independent (finance) companies paid approximately the
same money cost as GMAC" (page 1168).

2. On page 1178 Mr. Steere states that his company
charges $1 per $100 coverage per year for credit life
insurance; this compares with about $.39 charged by FMCC;
he also states that his company's underwriting profit on
credit life insurance is "approximately 60 cents". This
is an added cost of approximately $50 to a typical new
car buyer in financing through Mr. Steere's company.
These admissions confirm our testimony.

3. In Mr. Steere's opinion (page 1181), the rates that
independent companies charge dealers are comparable with
GMAC's net rates. His testimony is contrary to that of
Mr. Lundell of C.I.T. (1959 Hearings, pages 350; 355; 358),
Paul Jones of ASC Corporation (1959 Hearings, page 312),
and Mr. D. B. Cassat (1961 Hearings, page 201). His
testimony also is contrary to a statement by Chairman
Celler in a speech to the American Finance Conference in
November, 1960. a

"A Threat to Free Enterprise", address by Representative Emanuel Celler, Chairman of the Committee on the Judiciary, before the 27th Annual Convention of the American Finance Conference, Chicago, Illinois, November 11, 1960, page 8.

4. On page 1182 Mr. Steere refers to customer rates. The
American Finance Conference states in its "White Paper on
Automobile Financing" (Table II-23) that FMCC customer
rate charts in Dallas allow up to 8% for new cars. FMCC
will not purchase a new car retail contract with a customer
rate in excess of 8%; Mr. Steere's company does not impose
such a limitation. We have rate charts of Mr. Steere's
company that provide rates as high as 12.5% on new passen-
ger cars.

Testimony of Richard E. Meier, Interstate Finance Corp. (Ind.)

In our opinion Mr. Meier's statement can best be referred to as "general demagoguery". It follows pretty much the party line of the American Finance Conference. The best refutation to this type of attack, we believe, is the testimony of dealers and dealer associations, the persons who have firsthand knowledge of the situation. We believe that the NADA statement and the statement of the three Ford dealers refute Mr. Meier's position.

1. On page B-1, Mr. Meier attempts to steer the discus-
sion away from "relative finance charges between the
captives and the independents". Presumably, he does this
because of the admissions already made by the American
Finance Conference that the finance and insurance charges
of the companies affiliated with manufacturers generally
are lower than those of the unaffiliated finance companies.

2.

On page B-8, Mr. Meier has switched his argument from preceding pages and concedes that GMAC charges to the dealers are lower than other finance companies. He states, however, that these savings are not passed on to the consumer and implies that other finance companies do not provide a dealer reserve. Both charges are ridiculous as proved by the NADA and dealer statements. In fact, Mr. Meier's own statements at the bottom of the page concerning the low profits of auto dealers disprove his earlier statements about the dealers retaining the lower charges.

3. Mr. Meier on page B-9 says that new car dealers usually sell at least three times as many used cars as new cars. His statistics are not accurate. The ratio of used to new car sales by new car dealers actually averages approximately 1.5.

4. On page B-9 he refers to the usual American Finance
Conference argument "on five pockets of income". The
meaningless nature of this argument is pointed out by the
NADA statement (pages B-68 to B-71).

5. Mr. Meier on page B-18 states that "the amount of
loans made by banks" has little or no bearing on the ques-
tion of measuring GMAC's share of the market. Mr. Robert
H. Van Aman, Vice President of Associates Investment
Company, on the other hand, in a speech to the American
Finance Conference convention in November, 1960 (page
B-107) refers to commercial banks as "our greatest com-
petitors".

6. Mr. Meier attempts to keep alive the fiction that GMAC
"with rare exception" buys retail paper on which there is
recourse to the dealer. The facts of the matter are that
GMAC's percentage of non-recourse paper is approximately
the same as its two largest competitors, C.I.T. and CCC,
as evidenced by published reports of each company. In
each case the percentage of non-recourse paper runs in the
neighborhood of 25%.

American Finance Conference Exhibit

A new

This exhibit (beginning on page B-22) apparently is a reply to Mr. Stradella's testimony on the proportion of auto financing done by GMAC. idea has been introduced in an attempt to maximize GMAC's proportion of the market. The idea is to restrict the field only to time sales of GM dealers; carried to its logical conclusion, of course, GMAC handles 100% of the retail financing handled by GMAC.

In our testimony we showed clearly that the market is not segmented as the American Finance Conference representatives would like to have the Subcommittee believe.

Testimony of George W. Omacht

Mr. Omacht's statement covers at great length the history of the litigation against the automobile manufacturers. His thorough rehashing of

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