Auto Dealers Try To Steer Clear Of New Regulations
RENEE MONTAGNE, host:
Congress, meanwhile, is working to finish up broad legislation to overhaul the way U.S. financial institutions are regulated. The Senate's bill would create a consumer financial protection agency.
As NPR's Audie Cornish reports, that proposal faces strong opposition from, among others, auto dealers.
AUDIE CORNISH: The proposed Consumer Protection Bureau in the Senate bill is supposed to police the financial industry for abuses in mortgages, credit cards and other kinds of consumer debt, including car loans. But Ed Tonkin, of the National Automobile Dealers Association, says cars are their main business and when it comes to loans, they're just intermediaries so they shouldn't be included.
Mr. ED TONKIN (Vice president, Ron Tonkin Dealerships; Chairman, National Automobile Dealers Association): Auto dealers themselves only arrange the financing. They don't make the credit decision. They don't make the underwriting decision. They're able to go to the market, whether it's a captive finance company or a bank or a credit union, and find a competitive loan for the consumer.
CORNISH: David Arkush of the consumer group Public Citizen disagrees.
Mr. DAVID ARKUSH (Director, Public Citizen's Congress Watch): They're heavily involved in the financing of autos. A lot of them make more money on the financing than they make on the sale of the cars. And after home purchases, car purchases are the largest consumer purchases nationwide.
CORNISH: Consumer advocates and the White House are up in arms over an amendment by Kansas Republican Sam Brownback that would exempt the dealers from scrutiny by the proposed agency.
Senator SAM BROWNBACK (Republican, Kansas): And in a time when we're trying to save our core companies, to make it more difficult for them to arrange financing for their customers makes no sense at all.
CORNISH: The amendment has made unlikely opponents of car dealers and the military, because high ranking Defense officials say service members have been targets of predatory lending. That's left moderate Senate Democrats like Carl Levin of Michigan on the fence.
Senator CARL LEVIN (Democrat, Michigan): I just think there's a distinction between auto dealers and the other financial institutions. But I'm not sure whether or not there's a way that it can be opened up without creating other problems. So I just haven't decided what to do.
CORNISH: Last fall, car dealers got their exemption in the House version of the bill and hundreds of them are flying in today to lobby the Senate.
Audie Cornish, NPR News, the Capitol.