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After the House of Representatives voted to exclude auto loans earlier this week, the Congressional committee negotiating a final version of the financial-regulation bill, together with the Senate version that passed last month, agreed on a provision that would exempt auto dealers from Consumer Financial Protection Bureau oversight. The bill goes to the House and Senate for votes next week, where it's expected to pass and be signed into law by President Obama.
The move represents a full victory for auto dealerships and specifically the National Automobile Dealers Association (NADA), which had been lobbying hard in recent weeks to make sure that dealers aren't overseen by the Consumer Financial Protection Bureau, the new consumer-finance agency that looks after the mortgage, credit-card, and consumer loan industries—including the often-criticized payday loan business that's still given a long leash in some states.
“The goal all along was to keep a new, untested government agency from creating burdensome and unnecessary rules that would make it harder and more expensive for car buyers to access auto credit,” NADA spokesman Bailey Wood said, prior to the final word on the exemption.
Bill could have put the squeeze on sales, dealers argue
Auto dealers have consistently argued that any more regulation in this area would put a sizable dent in their business and potentially reduce the number of people who are qualified (or able) to purchase a vehicle, and that with all the economic difficulties in the industry, this is not the time to do it. Main Street shouldn't be given the same treatment as Wall Street, a number of Senators successfully argued last month.
Up until last night, there was still a chance that the new agency would maintain some limited authority for rulemaking affecting dealers.