The House will force the Senate to decide whether to side with President Barack ObamaBarack ObamaTrump order could undo designation of national monuments: report Trump will ramp up action on executive orders this week: reports French election: Le Pen, Macron will face off MORE or with the 18,000 auto dealers who want an exemption from a new consumer financial protection regulator.
Auto dealers, who say they had nothing to do with the financial crisis, have lobbied hard over the last year for a carve-out from the new consumer protection office at the heart of Democratic legislation to overhaul Wall Street. They have been up against the full force of the Obama administration, which has marshaled the Treasury Department and Pentagon against the exemption.
Despite his own opposition to the exemption, House Financial Services Committee Chairman Barney Frank (D-Mass.) said Monday that House lawmakers would continue to support the exemption they passed in December.
That move puts the final decision in the hands of a dozen Democratic and Republican senators in the conference committee. The Senate never approved the exemption, but it did pass, on a 60-30 vote, a non-binding measure in support.
Of the seven Democratic senators on the committee, five opposed the non-binding exemption and Sens. Blanche Lincoln (Ark.) and Charles SchumerCharles SchumerCompromise is the key to moving forward after Trump's first 100 days Dems: Trump’s first 100 days full of broken promises to middle class Priebus: I believe the government will stay open MORE (N.Y.) did not cast votes. The five Senate Republicans on the committee supported the exemption.
Twenty of the 43 conferees received a total of nearly $100,000 in campaign contributions from the political action committee of the National Automobile Dealers Association (NADA), the industry’s main lobbying group.
Consumer advocates have joined with the administration in arguing loudly against the exemption. They argue auto dealers represent the second-largest market, at $850 billion, for consumer credit and should not benefit from an exemption.
Consumer advocacy groups say the auto loan financing market disproportionately favors auto dealers and large captive finance companies over small banks and credit unions. According to a report from the Cambridge Winter Center, a nonpartisan group that has joined with many consumer advocacy group efforts, auto dealers channel nearly 80 percent of auto loans and leases.
In 2010, 63 percent of consumers purchased a new vehicle using a captive finance company and 37 percent using a bank or other lender, according to J.D. Power & Associates.
“The Pentagon has come out strongly against it because it sees the impact of bad loans on military families firsthand. The community banks and credit unions have come out against it because they want a level playing field,” said Elizabeth WarrenElizabeth WarrenWarren builds her brand with 2020 down the road Warren: Trump 'all talk' on Wall Street Dem senators ask Bannon for more info about Breitbart contact MORE, the Harvard University professor who has pushed for the new regulator. “All the consumer and labor groups have come out against it because they don’t think one group should be able to continue to trick their borrowers. It’s crazy that we would choose big banks and used-car dealers over the military, the small banks and all the public interest groups. It makes no sense, and it is wrong.”
NADA has waged a relentless grassroots campaign in favor of an exemption. They argue auto dealers are already regulated at the state and federal level and that the financial bill already allows regulators to oversee the actual auto loans.
“NADA strongly urges all conferees to accept the House’s language regarding dealer-assisted financing that continues the existing and effective regulation that currently provides consumers competitive auto financing choices,” said Bailey Wood, legislative spokesman for the association.
The group spent roughly $3.6 million lobbying since the beginning of last year, according to congressional records. The group’s political action committee has contributed more than $1 million to federal lawmakers this cycle, according to the Center for Responsive Politics and election records.
The effort paid off at numerous points during the debate. When the House Financial Services Committee marked up its version of the legislation last October, the committee supported the exemption on a bipartisan 47-21 vote. Rep. John Campbell (R-Calif.), a former auto dealer himself, championed the effort.
Rep. Mel Watt (D-N.C.) made a push to limit the exemption as the bill headed to the floor, but he withdrew his amendment at the last minute after discussions with Campbell. Rep. Bob Filner (D-Calif.) submitted an amendment to strike the exemption, but he too withdrew it before the full House considered the bill.
With the administration bearing down on the carve-out, the Senate never took up an amendment similar to the House’s that was sponsored by Sen. Sam Brownback (R-Kan.).