How a Philadelphia dealer might help end the CFPB feud

NEW ORLEANS -- Kerry Pacifico was a nominee for Time Dealer of the Year. He didn’t win.

But the 89-year-old Ford, Mazda and Hyundai dealer can head home to Philadelphia with satisfaction regardless, knowing that his struggle to satisfy fair-lending regulators a decade ago now offers a way for thousands of his fellow dealers to stay in the Consumer Financial Protection Bureau’s good graces.

The name Pacifico first entered industry lingo a few years ago thanks to a 2007 settlement with the Justice Department, in which Pacifico and a handful of other dealers agreed to collect a standardized amount of dealer reserve to resolve allegations of racial bias in interest rates.

That was not a brilliant innovation. But Pacifico added a twist. If someone in the F&I office needed to deviate from that dealer reserve to beat another dealer’s interest rate, they had to explain why they did it.

It pacified the regulators. Lending wonks came to call it the “Pacifico approach.”

As it happens, Pacifico’s approach is fairly close to the plan that the National Automobile Dealers Association endorsed this week in an effort to resolve the CFPB’s concerns about the risk of racial discrimination in lending.

After months of public disputes, NADA is offering an olive branch to the CFPB. If the agency takes it, NADA’s proposed method could very well become a new industry standard.

Interviewed at the dealer group’s convention this week, Pacifico said he was happy to learn that NADA would borrow his approach.

“‘You’re going to use my model, I understand,’“ he recalls saying to an NADA official this week. “‘So I said: I want some of the royalties. Where are the royalties?’“

He was kidding, but Pacifico did spend hundreds of thousands of dollars and years in court coming to that resolution. And if his approach could spare other dealers from such a costly snafu, he wants them to follow it.

“I would encourage them to do it,” said Pacifico, who has been active in managing the dealership since 1945, when it sold cars from the long-defunct Kaiser-Frazer brand. “It doesn’t cost anything.”

You can reach Gabe Nelson at

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