Senate backs exclusion for car dealers
Obama sought to extend new oversight to sellers
WASHINGTON – In a rare defeat for President Barack Obama, the Senate on Monday called for auto dealers to be excluded from the regulations of a proposed consumer financial protection bureau.
The nonbinding 60-30 vote provides direction to lawmakers as they assemble broad Senate and House bills setting new, sweeping controls on Wall Street. The Senate passed its bill last week; the House acted in December.
The House bill already includes an exemption for auto dealers, who mounted a vigorous lobbying campaign to escape the reach of the legislation. While the Senate bill does not include such an exclusion, Monday’s vote gives auto dealers an extra measure of leverage to avoid the reach of a consumer entity.
Obama has argued forcefully against diluting the bill’s consumer provisions. The administration has enlisted the help of the Pentagon, which maintains soldiers are especially prone to car loan schemes, and Obama himself spoke out against the exclusion last week.
Auto dealers say they only process the loans and then turn them over to other lending institutions for them to administer and service. The exclusion would not apply to auto dealers that provide their own financing, such as Carmax, or to giant auto lender GMAC.
“There’s not a single auto dealer on Wall Street,” said Sen. Sam Brownback, R-Kan., the leading sponsor of the exclusion. “These are Main Street businesses and they took it on the chin last year.”
Senate Banking Committee Chairman Chris Dodd, D-Conn., argued that auto dealers, like community banks and other institutions that assemble mortgages and other loans, should fall under the agency’s oversight.
“The second-largest purchase that most Americans make is the purchase of an automobile,” he said. “We buy a home and we buy an automobile, and they are expensive. … We’re trying to protect people.”