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Senate Votes to Exempt Car Dealers From Consumer Protections

May 24, 2010 - by Donny Shaw

The Senate has been done with the financial reform bill since last Thursday, but supporters of exempting car dealers that facilitate loans from oversight by the proposed Consumer Financial Protection Bureau got one more chance today to promote their position, and they won big.

Sen. Sam Brownback [R, KS] is the main supporter of the exemption. He argues that, the way it’s done now, dealer financing is fair and sound, and that regulating it would decrease financing access for consumers. Consumer protection groups, on the other hand, argue that auto loans — the most common type of large loan held by Americans — are often scammy and abusive.

Today’s vote came on what is known as a “motion to instruct conferees.” These are non-binding suggestions that the Senate sends along with their conference committee members as they go to broker compromises with the House in all the arease their bills differ. In this case, the House financial reform bill contained an auto dealer exemption, but the Senate bill did not. Brownback’s motion to instruct, which was approved 60-30, recommended that the Senate concede their position and go along with the House language.

Twenty Democrats sided with every voting Republican in supporting Brownback’s motion. Ten senators did not vote.

The exemption was added to the House’s financial reform bill last December in the form of an amendment from Rep. John Campbell [R, CA-48] during the Financial Services Committee mark-up. The vote was 47-21.

The exemption still may not make it into the final bill that gets signed into law. The Obama Administration strongly opposes the exemption, calling it a “loophole” that 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 main Democrats in the conference committee negotiations — Senate Banking Committee Chairman Sen. Chris Dodd [D, CT] and House Financial Services Committee Chairman Rep. Barney Frank [D, MA-4] — oppose it as well. But the fact that both times the issue has been voted on in Congress the ayes outweighed the nays by at least a 2-to-1 ratio is a big boost for backers of the exemption heading into the conference committee negotiations this week.

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Comments

  • AnnabelleE 06/20/2010 7:55pm

    Car dealerships are paying specifically close focus on the " href="http://www.cardealexpert.com/news-information/opinion/house-democrats-auto-dealer-exemption/ ">financial reform bill. Rather than having to have somebody oversee them, they are seeking an auto dealer exemption to keep setting their very own rates in industry standard lending practices. If this bill in introduced, even auto lenders would have to comply with the regulation of somebody watching over them. Whether this bill passes or not; I cannot help but wonder how much more our government is likely to get involved with our lives before we realize we now have lost numerous of rights to a free market. The federal government can only get so involved before they’re over involved, and they’re pushing that line if they have not already crossed it.

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  • ChelseaA 06/20/2010 8:35pm

    <a title=“House Dems seek auto dealer exemption from financial reform” href=“http://www.cardealexpert.com/news-information/opinion/house-democrats-auto-dealer-exemption/”>financial reform bill

  • Chris51 07/01/2010 10:09am

    Corporations have increased their cash reserves to $1.84 TRILLION, THE HIGHEST FIGURE IN HISTORY! Big business and the banks, after an unprecedented bailout by the public treasury, are hoarding the funds (Americans pay this back on their IRS tax bill). BIG CORPORATIONS EXECUTIVES ARE MAKING BIG BONUSES AND GETTING SALARY INCREASES FOR SHOWING HUGE PROFITS. The cash reserves of major corporations have jumped 26 percent in one year, the largest percentage increase in nearly 60 years. The cash reserves of working people, and particularly the unemployed, have not been so fortunate.

    REPUBLICANS bloc, the SENATE vote and defeat sevaral proposed extension of unemployment benefits for unemployed workers. Many of these same Senators rushed through a $700 BILLION bailout of Wall Street in 2008 in a matter of days, cannot bring itself to support even the most meager subsistence for the unemployed workers who are the victims, not the perpetrators, of the economic crisis.
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