By Silla Brush - 06/23/10 12:04 AM EDT
Congress is on the verge of handing President Barack ObamaBarack ObamaOur most toxic export: American politick State Dept. insists Brexit won't hurt relations with UK, EU WATCH LIVE: Obama speaks at roundtable with Zuckerberg MORE a major defeat by exempting auto dealers from oversight of a new consumer financial protection regulator.
The White House campaigned hard over the past year against a carve-out from the regulator that is at the heart of Democratic efforts to overhaul Wall Street. But the auto dealer lobby and its 18,000 dealerships mobilized a massive grassroots push for an exemption.
Obama “opposes carve-outs like this one,” said spokeswoman Amy Brundage. But she added, “While we knew that we’d not win every fight, the president will soon sign into law historic Wall Street reform that includes the strongest consumer protections ever.”
Meanwhile, House lawmakers on the conference committee voted down a proposal that would have restricted the exemption. Rep. Luis GutierrezLuis GutierrezHispanic lawmakers face painful decision on Puerto Rico Frustration with White House builds in Hispanic caucus Puerto Rico debt relief faces serious challenges in Senate MORE (D-Ill.) pushed an amendment to give the new consumer regulator’s “backstop authority” to the Federal Trade Commission (FTC).
But the amendment failed on a 9-10 vote, overcoming the strong support of House Financial Services Committee Chairman Barney Frank (D-Mass.). Democratic Reps. Gary Peters (Mich.), Mary Jo Kilroy (Ohio) and Dennis Moore (Kan.) sided with all seven Republicans who had a vote on the issue.
“I’m not sure what exemption is left here,” Rep. Spencer BachusSpencer BachusThe FDA should approve the first disease-modifying treatment for Duchenne Muscular Dystrophy Study: Payday lenders fill GOP coffers Pope Francis encourages building bridges to address challenges MORE (R-Ala.) said of the Gutierrez effort to narrow the exemption.
A frustrated Gutierrez said he would continue to push on the issue until the conference committee finishes its work.
The auto dealer lobby was pushing against the Senate modifications and continued to support the House version of the exemption.
The Treasury and Defense departments pushed hard against the exemption, arguing that auto dealers have engaged in predatory lending that has targeted military service members. Consumer advocates have also argued the exemption would hurt small banks and credit unions that offer car loans. They say it disproportionately favors auto dealers that arrange loans, often through automakers’ own finance companies.
The National Automobile Dealers Association (NADA) praised lawmakers for supporting the exemption.
“The defeat of the Gutierrez amendment to the House offer is just another instance in a series of both House and Senate votes where Congress chooses — on a broad bipartisan basis — to keep dealers out of the Wall Street reform bill in order to keep dealer-assisted financing affordable and accessible for all car buyers,” said Bailey Wood, legislative spokesman for the association.
The Senate, which did not include the exemption in its version of the bill, underscored that the Federal Reserve and Federal Trade Commission retain powers over auto dealerships. Auto dealers said they are already regulated by state and federal officials and do not need to fall under a new government regulator.
Lobbyists and lawmakers continued Tuesday to negotiate some other controversial issues. At the top of their list of concerns remain provisions restricting banks’ derivatives trading and limits on banks engaging in proprietary trading and sponsorship of hedge funds and private equity funds.
The conference committee is slated to debate those issues on Thursday.