Car Dealers Exempted From Consumer Financial Protection Act

Edward Niedermeyer
by Edward Niedermeyer


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

Edward Niedermeyer
Edward Niedermeyer

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  • 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?

  • Mike Some Evs are hitting their 3 year lease residual values in 6 months.
  • Tassos Jong-iL I am just here for the beer! (did I say it right?)
  • El scotto Tim, to be tactful I think a great many of us would like a transcript of TTAC's podcast. 90 minutes is just too long for most of us to listen. -evil El Scotto kicking in- The blog at best provides amusement, 90 minutes is just too much. Way too much.
  • TooManyCars VoGhost; I was referring more to the Canadian context, but the same graft is occurring in the US of A and Europe. Political affiliation appears to be irrelevant.
  • The Oracle Going to see a lot of corporations migrating out of Delaware as the state of incorporation. Musk sets trends, he doesn’t follow them.
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