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Wednesday, May 12, 2010

Politics aside, it might be smart to consider politics when setting policy

The developing financial reform movement is starting to see more than a few hitchhikers. As one example, a story in today’s New York Times suggests that car dealerships (and their financing practices) could be affected by legislation intended to bring clarity and consumer protections to the derivatives market.

That might sound like a bit of a stretch for some people—especially if you’re in the car business—but you’ll see the connection that is being made if you take a moment to read the story.

Implications: For what it’s worth, I believe car dealerships get an unfair share of bad press and criticism; the vast majority of shops are wonderful corporate citizens that serve an important function in the community. They are a source of jobs to thousands of people (it takes a lot of sales people, service technicians and managers to run a dealership), and they are often generous supporters of various causes and charities in the communities where they prosper. Auto dealers are a great example of the idea that a few bad apples give the entire industry a bad rap.

That having been said… I can see why—in a mid-term election year—politicians are piling-on to the idea of fairness. Few people will criticize a vote-hungry politician for saying, “I will work to make sure consumers are treated fairly.” That is a safe position for any politician.

My advice would be to consider the angst that led to this issue in the first place. How do your consumers define “fair?” Based on
the NY Times story, I’m thinking that the difference between fair and unfair is often little more than information. There is a very close correlation between feeling informed and feeling “treated fairly,” as there is between finding out later that one was uninformed, and thus feeling they were treated unfairly.

I don’t like politics or regulations any more than most folks do. But I do think it wise to consider politics when setting policy. If voters (consumers, all) are in the mood for greater transparency, communication and clarity… a company can profit from delivering those elements long before they are regulated into doing so.

Mike Anderson

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