WASHINGTON — President Barack Obama gave last-minute support today to the banks, civil rights groups, consumer advocates and military families that oppose an exemption for auto dealers from oversight by a proposed consumer protection agency.
Sen. Sam Brownback, R-Kan., plans to introduce this dealer exemption as early as tomorrow as an amendment to a sweeping financial regulation bill.
The measure would place the financial institutions that extend consumer auto loans under the umbrella of a new consumer financial-protection agency while leaving dealers' roles in helping arrange these loans under the supervision of current regulators.
“This amendment guts provisions that empower consumers with clear information that allows them to make the financial decisions that work best for them and simply encourages misleading sales tactics that hurt American consumers,” Obama said in a statement. “Unfortunately, countless families — particularly military families — have been the target of these deceptive practices.”
The White House issued the statement as the Senate prepares to consider the amendment as early as tomorrow, and the National Automobile Dealers Association urges its 17,000 members to keep up pressure on their senators.
NADA predicts victory
Both Brownback and NADA have predicted victory in the Senate. The House already has approved an exemption to a proposed new consumer financial-protection agency.
“Auto dealers are a part of Main Street, not Wall Street, and they are not responsible for the financial meltdown,” Brownback, who is running for governor of Kansas, said in a statement today. “Auto dealerships, including those located near military bases, are currently regulated by the Federal Trade Commission on the federal level and by several local and state agencies.”
NADA added: “The Brownback amendment is pro-consumer as it preserves dealer-assisted financing as an affordable, convenient and competitive source of credit for car buyers.”
While the amendment could be introduced tomorrow, it also might be delayed till next week, a Brownback spokesman said.
A Treasury official joined consumer advocates, military families and civil-rights groups last week in urging dozens of Senate staffers to help vote down the amendment.
The Independent Community Bankers Association and the Credit Union National Association also weighed in against the exemption earlier this week.
Obama said today that the Brownback amendment would allow dealers “to inflate rates, insert hidden fees into the fine print of paperwork and include expensive add-ons that catch purchasers by surprise.”
The proposed new regulator would be a stand-alone agency under the House bill and part of the Federal Reserve under the Senate bill.
Under the legislation, the new agency would supervise mortgages and credit and debit cards, as well as auto loans.
The financial-regulation bill would, among other things, force large banks to hold more capital, give regulators the authority to dismantle a failing financial firm, require derivatives trading to be cleared through an exchange.