President Obama has weighed in on a crucial matter facing legislators attempting to overhaul America’s financial system: whether or not auto dealer finance should be subject to regulation by the new Consumer Protection Agency. Unsurprisingly, he has come down on the side of regulation, specifically echoing concerns voiced earlier by the Pentagon. The National Automobile Dealers Association has vowed to fight attempts to regulate dealer finance.
Statement by President Obama on Financial Reform
Throughout the debate on Wall Street reform, I have urged members of the Senate to fight the efforts of special interests and their lobbyists to weaken consumer protections. An amendment that the Senate will soon consider would do exactly that, undermining strong consumer protections with a special loophole for auto dealer-lenders. This amendment would carve out a special exemption for these lenders that would allow them to inflate rates, insert hidden fees into the fine print of paperwork, and include expensive add-ons that catch purchasers by surprise. 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. Unfortunately, countless families – particularly military families – have been the target of these deceptive practices.
Claims by opponents of reform that this legislation unfairly targets auto dealers are simply mistaken. The fact is, auto dealer-lenders make nearly 80 percent of the automobile loans in our country, and these lenders should be subject to the same standards as any local or community bank that provides loans. Auto dealer-lenders offering transparent and fair financing products to their customers should welcome these reforms, which will make their competitors who don’t play by the rules compete on a level playing field.
We simply cannot let lobbyist-inspired loopholes and special carve-outs weaken real reform that will empower American families. I urge the Senate to continue to defeat the efforts of special interests to weaken protections for all American consumers.