Senate Votes to Exempt Car Dealers From Consumer ProtectionsMay 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.