The National Automobile Dealers Association has political muscle, and it was not afraid to use it to get the highly sought-after auto dealer exemption from Consumer Financial Protection Bureau oversight. Automotive News interviewed NADA spokesman Bailey Woods, who told the industry publication the House and Senate committees came to the proper conclusion for consumers, as added regulation would have made dealer financing more difficult to organize and hence a lot more costly. As it stands, it is Christmas in June for auto dealers; they lobbied and Congress delivered.
A victory for auto dealer exemption
The CFPB can have jurisdiction over mortgages, credit cards and other styles of consumer credit like pay day loan, but the auto dealer exemption will leave dealer financing out of the new government agency’s hands. Dealer-financed autoloans may also continue without interruption, but the CFPB will exert their influence on the financial institutions that fund car dealer finance corps. The Federal Trade Commission still supervises auto dealers, but those in Congress who sought to bring dealer financing under CFPB scrutiny are dissatisfied with that system, as it takes the FTC as long as eight years to enact significant change. This is due to additional reviews the FTC must perform that are not required of federal agencies.
Rep. Barney Frank bemoaned the lack of votes
Barney Frank and other House Democrats wanted auto dealers to be put on a leash, as did President Obama, the Pentagon, military families, consumer rights and civil rights grounds, indicates Automotive News. Where the finance bill began and where it ended up after NADA’s lobbying was a tale of the power of campaign contributions. All the organization got for their trouble was a concession the FTC could speed up their standard-writing process for auto dealers. Practices of dealer finance that may overcharge will be allowed to go on. It’s the nature of the beast, as numerous dealers see the matter.
Citations:
http://www.autonews.com/apps/pbcs.dll/article?AID=/20100625/RETAIL07/100629912/1128
