WASHINGTON -- Dealer-assisted financing of customers' car purchases would be regulated by a new consumer protection office under a financial-regulation bill passed by a Senate committee yesterday.
The provision is markedly different from one that passed the House in December, which would exempt dealers from regulation by a new independent consumer protection agency.
The 1,336-page Senate Banking Committee bill, which now goes to the Senate floor, would create a Consumer Financial Protection Bureau inside the Federal Reserve.
It seeks to centralize federal oversight of financial products for consumers, such as subprime mortgages as well as credit and debit cards, that helped contribute to the financial collapse in the U.S. in 2008 and 2009.
Oversight of auto financing by a new agency was pushed by consumer groups and the Pentagon over objections by the National Automobile Dealer Association.
“Dealers weren't the cause of the mortgage meltdown,” said NADA Washington lobbyist Bailey Wood. “In fact, dealers still have problems with access to credit and are as much a victim of what happened as the average consumer.”
Talking to senators
NADA is talking to several senators about sponsoring an amendment on the Senate floor that would exempt dealers from oversight by a new agency, he said.
If such an amendment were to be introduced, NADA plans to ask dealers across the country to urge their senators to vote for it, Wood said.
A similar grassroots effort by NADA led to an amendment in the House by Rep. John Campbell, R-Calif., that exempted dealers from oversight by the Consumer Financial Protection Agency.
In the bill that passed the House, the federal unit that would regulate the consumer financial products would be an independent, stand-alone agency rather than a bureau housed inside the Fed.
Senate leaders have not said when the bill will be considered on the Senate floor. If the Senate were to pass the legislation as is, its leaders would have to meet with House leaders to try to reconcile differences between the two bills.
'Have the courage'
Rosemary Shahan, president of the Consumers for Auto Reliability and Safety in Sacramento, Calif., today hailed the Senate panel's passage of the bill.
“We hope that Congress will have the courage to stand up to the auto dealer lobby and address the No. 1 source of consumer complaints in the U.S. -- auto dealerships and auto sales practices,” she said.
The Pentagon last month endorsed regulation of dealer-assisted financing by a new agency, citing dealers' exploitation of service members and their families.
“There are still documented cases of service members falling victim to predatory practices and prohibitively expensive products,” Under Secretary of Defense Clifford Stanley wrote in a Feb. 26 letter to the U.S. Treasury Department.
