Banking/Financial Institutions

Obama comes out swinging against auto dealer-backed measure

Obama issued a statement Wednesday that said the Senate
should vote against the proposed auto dealer and lender carve-out in the reform

The proposal would allow lenders to “inflate rates, insert
hidden fees into the fine print of paperwork and include expensive add-ons that
catch purchasers by surprise.”

Obama cast the measure as an effort to protect special
interests and weaken consumer protections.

{mosads}“This amendment guts provisions that empower consumers with
clear information that allows them to make the financial decisions that work
best for them and simply encourages misleading sales tactics that hurt American
consumers,” Obama said. “Unfortunately, countless families – particularly
military families – have been the target of these deceptive practices.”

The president said the proposed carve-out would undermine strong
consumer protections with a “special loophole” for auto dealers and lenders.

“We simply cannot let lobbyist-inspired loopholes and special carve-outs weaken
real reform that will empower American families,” Obama said.

Obama’s statement marks the second time in the debate the president has called on the Senate to defeat an amendment without directly
threatening to veto the legislation.

Sen. Sam Brownback (R-Kan.) is the main sponsor of the measure.

A spokesman for the auto dealers insisted the amendment would help consumers by preserving affordable and convenient, dealer-assisted financing.

“Auto dealers, using their relationships with numerous lenders, are able to help the 9 million ‘unbanked’ but creditworthy families secure a loan to purchase a car,” said Bailey Wood, a spokesman for the National Automobile Dealers Association.

He said the Senate bill, without an amendment, would put families at risk of losing access to auto credit, or would at least force them to pay a higher interest rate.

“Auto loans and leases are more affordable for consumers because dealers force lenders to compete for our customer’s business,” Wood said. “Adding burdensome and expensive regulations on Main Street auto dealers will only make it harder and more costly for a family to buy a car.”

This story was posted at 1:37 p.m. and updated at 2:54 p.m.


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