Dealers fear that the federal government's expanded authority over dealer-assisted financing – granted by Congress last year in response to the U.S. financial meltdown – will encroach on their private-sector prerogatives.
The sweeping new law created the U.S. Consumer Financial Protection Bureau to oversee consumer financial products and made it easier for the FTC to adopt new rules.
With the July 2010 law in place, the battleground for trade groups and the consumer advocates that oppose them has shifted to the implementation of the law's provisions.
"Our goal all along has been to keep credit affordable and accessible," NADA spokesman Bailey Wood said. "Overregulation will prevent those two things from happening."
The consumer agency's authority over dealer-assisted financing is limited to lenders. New-car dealerships do not fall under its purview.
NADA cues members
NADA has told its 16,000 members that it supports congressional efforts to limit the authority of the consumer agency's director, who has not yet been appointed. The agency is due to start operating on July 21.
Wood said NADA also is considering whether to weigh in with Congress on the Republican-backed legislation.
The American Financial Services Association, whose members include Ally Bank, Toyota Financial Services, and Wells Fargo, has taken a more active role in pushing the legislation.
"The power and authority of the new bureau is reason for concern about potential abuses in the area of finance," said association CEO Chris Stinebert.
The Consumer Bankers Association, whose members include JP Morgan Chase, U.S. Bank and Bank of America, also has been lobbying for the new bills.
The Obama administration wants the consumer agency to simplify auto-loan disclosure forms as part of a broader effort that would do the same for mortgages and credit cards, a senior Treasury official said last year.
A total of 44 Republican senators, including minority leader Mitch McConnell of Kentucky, have said they wouldn't confirm any nominee for agency director unless the authority of the position is trimmed.
President Obama hit back after receiving the senators' May 2 letter.
"For far too long, American consumers have fallen victim to fraud, misleading claims, and powerful special interests and the President believes that American families who were the hardest hit by this financial crisis deserve an independent watchdog to protect consumers and prevent predatory lending and other abuses in the future," White House spokeswoman Amy Brundage said.
House legislation would replace the agency director with a five-member bipartisan commission and make it easier for new agency rules to be overturned by a committee of financial regulators.
The presidential appointee to head the agency has to be confirmed by the Senate. Obama still can make a temporary appointment when Congress is out of session.
Harvard University law professor Elizabeth Warren has been helping start the agency since September, when she was named an assistant to the president.
FTC sniffs around
The FTC is gathering testimony and information about dealer practices in a series of public roundtables that started last month.
NADA told the commission that a review of customer complaints showed "there are no systemic concerns with dealer-assisted financing."
Less than 1 percent of complaints compiled by the FTC last year dealt with new or used auto sales, NADA said last month.
The dealer group also objected to the FTC's "unbalanced and hostile view" reflected in a "series of leading questions" posed by the agency in announcing the April roundtable.
An FTC spokesman declined comment.
The dealer and banking groups are opposed by consumer advocates who contend that the federal government needs to actively protect car customers from possible financing abuses.