Car Dealers Exempted From Consumer Financial Protection Act

car dealers exempted from consumer financial protection act


The Detroit News reports that car dealers are trustworthy enough (or, more likely, influential enough) to be exempted from the House Financial Services Committee’s recently-passed version of the Consumer Financial Protection Act. The bill, intended to prevent another credit crisis through federal regulation, would have made dealers subject to Consumer Financial Protection Agency oversight had Rep John Campbell (R-CA) not introduced an amendment [ PDF] exempting them. David Westcott, chairman of National Automobile Dealers Association’s government affairs committee applauded the move

It makes sense to exclude dealers. Dealers had absolutely nothing to do with the credit crisis. The overwhelming majority of committee members clearly understand that CFPA jurisdiction over dealers is unnecessary and that increased uncertainty in the auto marketplace would limit consumer finance options and increase car buyers’ costs

But the OC Watchdog and consumer group Common Cause are already laying into the Campbell amendment, pointing out that (in addition to his 25 years in the auto retail business), six dealerships pay rent to Campbell. In addition to the $600,000 to $6m in annual rent, Campbell also reportedly received $170,000 in campaign contributions from auto dealers since he’s been in congress. Campbell’s response:

First, he said, four of the six entities that paid him rent are no longer car dealers. They are body shops or real estate holding companies.

Second, Campbell said he hasn’t been involved in the car business for the past six years.

Third, he says he ran his amendment by the House ethics committee and was told it was not a conflict of interest for him to offer it.

Campbell said his amendment will not financially benefit car dealers. “All this is trying to do is save them from needless regulation. It’s not like it’s a tax credit, not like it’s stimulus money.’’

He may have point there, although vetting by the House ethics committee is as meaningless as a Ralph Nader presidential bid. Campbell did recuse himself in the vote on an auto industry bailout, because he said money would go directly to General Motors, a firm he has done business with for years.

But besides the potential conflict of interest, there’s the question of the necessity of covering auto dealers. NADA argues that auto-related complaints were just 1 percent of all FTC complaints last year, and that all states regulate auto finance. On the other side, a coalition of consumer and other advocacy groups (including Consumer Watchdog, Consumers Union, the California Public Interest Group, the NAACP) contends:

While the vehicles themselves have never been better, auto sales and financing practices have never been worse. In fact, year after year, auto sales and service complaints, typically related to predatory lending practices at dealerships, rank number 1 among consumer complaints lodged with state and local consumer protection agencies

Comments
Join the conversation
2 of 9 comments
  • Via Nocturna Via Nocturna on Oct 23, 2009

    Perhaps the House should instead incorporate a provision into the bill that requires any car dealer wishing to avoid gov't oversight of its lending practices to enroll all its employees in a remedial English class. Ugh. "'Is' your auto 'notes' getting too 'heavy'".

  • John Horner John Horner on Oct 23, 2009

    "Rep John Campbell (R-CA) not introduced an amendment [PDF] exempting them .... " Once again a Republican waters down a consumer protection bill. But one must wonder, how many house Republicans will actually vote for the bill once it gets to the floor vote?

  • Arthur Dailey For the Hornet less expensive interior materials/finishings, decontent just a little, build it in North America and sell it for less and everyone should be happy with both the Dodge and the Alfa.
  • Bunkie I so wanted to love this car back in the day. At the time I owned a GT6+ and I was looking for something more modern. But, as they say, this car had *issues*. The first of which was the very high price premium for the V8. It was a several thousand dollar premium over the TR-7. The second was the absolutely awful fuel economy. That put me off the car and I bought a new RX-7 which, despite the thirsty rotary, still got better mileage and didn’t require premium fuel. I guess I wasn’t the only one who had this reaction because, two years later, I test-drove a leftover that had a $2,000 price cut. I don’t remember being impressed, the RX-7 had spoiled me with how easy it was to own. The TR-8 didn’t feel quick to me and it felt heavy. The first-gen RX was more in line with the idea of a light car that punched above its weight. I parted ways with both the GT6+ and the RX7 and, to this day, I miss them both.
  • Fred Where you going to build it? Even in Texas near Cat Springs they wanted to put up a country club for sport cars. People complained, mostly rich people who had weekend hobby farms. They said the noise would scare their cows. So they ended up in Dickinson, where they were more eager for development of any kind.
  • MaintenanceCosts I like the styling of this car inside and out, but not any of the powertrains. Give it the 4xe powertrain - or, better yet, a version of that powertrain with the 6-cylinder Hurricane - and I'd be very interested.
  • Daniel J I believe anyone, at any level, should get paid as much as the market will bear. Why should CEOs have capped salaries or compensation but middle management shouldn't? If companies support poor CEOs and poor CEOs keep getting rewarded, it's up to the consumer and investors to force that company to either get a better CEO or to reduce the salary of that CEO. What I find hilarious is that consumers will continue to support companies where the pay for the CEOs is very high. And the same people complain. I stopped buying from Amazon during the pandemic. Everyone happily buys from them but the CEO makes bank. Same way with Walmart and many other retailers. Tim Cook got 100m in compensation last year yet people line up to buy Iphones. People who complain and still buy the products must not really care that much.
Next