Dealers to Senate: Leave loans alone
The nation’s auto dealers are to head to the U.S. Senate on Monday, ready to play man-to-man defense to stop a bill that would for the first time put their lending business under a single federal watchdog.
Even though the regulatory plan has the support of the Obama administration and key Democrats, past showdowns suggest it’s never wise to bet against the car dealers.
Sen. Chris Dodd, D-Conn., is a key supporter of the consumer financial protection agency proposed in the financial reform bill set to hit the Senate floor soon.
The agency would regulate businesses that lend money to consumers — from banks, mortgage companies and credit card firms to auto dealers.
A similar bill that passed the House exempted dealers.
“Our current financial system leaves consumers vulnerable to being deceived,” said Dodd, who noted that dealers “have been shown to take advantage of military service members. This bill puts an end to those abuses.”
But the roughly 100 dealers flying to lobby lawmakers are expected to contend they’re already regulated by federal and state laws, and that new rules would limit credit for customers and hurt the economy.
Over the past year, auto dealers have won every face-off with the Obama administration or Congress.
When the cash-for-clunkers program proved so popular it burned through $1 billion in funding in a matter of days last August, dealers helped push through an emergency $2 billion.
When U.S. Rep. Barney Frank, D-Mass., shepherded the House version of the financial reform bill through last fall, fellow Democrats on his committee — over his objections — joined Republicans to spare auto dealers from the regulations.
And when General Motors and Chrysler, with the support of the Obama auto task force, announced plans to cut nearly 3,000 dealers in bankruptcy, the dealers helped push a bill through Congress over the White House’s objection late last year granting cut dealers arbitration to make their case. Hearings began last week.
On Monday and Tuesday, about 100 dealers are to hit Capitol Hill to push an amendment by Sen. Sam Brownback, R-Kan., that would amend the Senate financial reform bill under debate this week to add an exemption for dealers already in the House version, warning that without it the bill would curtail dealers’ ability to offer loans to carbuyers.
“We probably couldn’t do it or wouldn’t want to take the risk,” said James Waldron, president of Waldron Pontiac-Buick-GMC in Davison, east of Flint. “It’d be a huge injustice to consumers because they’d have to go elsewhere to secure loans or they wouldn’t be available.”
Latest financial news read on Financial Watch.
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