NADA Says Dealer-Assisted Financing Under Attack as White House Sets Sights on Auto Finance for New Consumer Agency
WASHINGTON (April 12, 2010) - With legislation to reform the nation's financial system soon to be considered by the full Senate, President Obama has indicated that he wants to overturn a provision in the House-passed bill that excludes auto dealers from a newly proposed consumer financial protection agency.
Obama said in a March 15 statement that he wants a broad, independent agency to regulate all financial entities, even those entities that had nothing to do with the 2008 credit crisis.
“I will not accept attempts to undermine the independence of the consumer protection agency, or to exclude from its purview banks, credit card companies or non-bank firms such as debt collectors, credit bureaus, payday lenders or auto dealers,” Obama said.
The Senate is to take up legislation creating a Bureau of Consumer Financial Protection (BCFP) in late April. The agency would have sweeping powers to fundamentally alter or even potentially regulate out of existence auto financing at dealerships. The new bureau would also have the authority to reduce or eliminate dealer compensation for arranging a loan or lease, and could even limit a salesperson's commission connected to a sale if the vehicle is financed.
Sen. Sam Brownback, R-Kan., has agreed to offer an amendment to exclude auto retailers from the bureau's jurisdiction. The amendment faces a steep uphill battle as consumer groups and the Obama administration have come out in full-force against the idea of exempting auto dealers from the jurisdiction of this bureau.
Last December, the House voted to retain the current oversight of dealers by the Federal Reserve, the Federal Trade Commission and numerous state consumer protection laws through language identical to the Brownback amendment.
“Dealer-assisted financing is under attack and dealers should be calling their Senators to ask them to support the Brownback amendment,” warns David Regan, NADA vice president of legislative affairs. “With the bill already out of committee, the financial reform bill is likely to move very quickly. Dealers, their sales team and their financing staff should immediately weigh in with both of their Senators.”