WASHINGTON -- A Senate proposal to exempt car dealers from oversight by a proposed consumer protection agency has been changed to add a requirement that military families' complaints about dealers be monitored and shared by the new agency.
Under the new proposal, filed late yesterday by Sen. Sam Brownback, R-Kan., the proposed agency's military liaison office would coordinate with the federal agencies that now oversee dealers to ensure that these complaints are addressed.
But under the Brownback plan, investigations of these complaints and the devising of rules affecting dealers would remain with the current oversight agencies -- the Federal Reserve and Federal Trade Commission.
“The addition was made to address concerns raised by some military groups,” Brownback spokeswoman Becky Ogilvie said today.
Bailey Wood, a National Automobile Dealers Association spokesman, said the changes in the proposal would still “prevent a new agency from adding an additional layer of rules over dealers.”
The Military Officers Association of America, which has opposed the Brownback amendment, said it continues to do so even after the change.
"Senator Brownback’s change fails to provide any additional protections for servicemembers and their families from unscrupulous dealers and places responsibility directly onto the troop to identify fraud and avoid being taken advantage of," said association spokesman Michael F. Hayden, a retired Air Force colonel.
The Brownback proposal -- an amendment to the sweeping financial regulation bill now before the Senate -- could be debated and voted on as early as late tomorrow, Wood said.
The Senate vote on the amendment is expected to be close, and it is unclear how many votes will be swayed by the changes.
The U.S. Treasury Department has been leading a coalition of military, banking, consumer and civil rights groups against the Brownback amendment. The agency declined to comment today.
A press conference on the new amendment has been scheduled for tomorrow by Brownback, NADA, the American International Automobile Dealers Association and the National Association of Minority Automobile Dealers as the groups' lobbying continues.
“Dealers will make the case that unnecessary, burdensome and overreaching rules will only limit auto finance options and hurt the consumers which the new agency is seeking to protect,” NADA said in a statement.
President Barack Obama spoke out against the Brownback amendment last week.
“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 May 12. “Unfortunately, countless families -- particularly military families -- have been the target of these deceptive practices.”
Secretary of the Army John McHugh also expressed concern about the Brownback amendment last week.
“Over the years, many of our soldiers have fallen victim to predatory lending practices and have entered into contracts for prohibitively expensive financial products promoted by some unscrupulous car dealerships and lenders,” McHugh said May 12.
In February, Undersecretary of Defense Clifford Stanley said an internal survey had found cases of “ ‘bait-and-switch' financing, falsification of loan applications or other documents, failure to pay off liens on trade-in vehicles, ‘packing' loans with items whose price tag bears little or no relationship to their actual cost or value, and discriminatory lending.”
The House passed a financial regulation bill that contains an exemption for dealers from oversight by the new consumer protection agency.
If the Senate were to pass its measure without the Brownback exemption, differences in the two bills would have to be resolved in a conference of congressional leaders.