Quote Of The Day: You Can Trust Your Dealership After All Edition

Edward Niedermeyer
by Edward Niedermeyer

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.

This is what president Obama said just six weeks ago about efforts to exclude car dealership financing from consumer protection measures included in the forthcoming Financial Reform bill. With that bill moving towards Obama’s desk, all that stands in the way of its passage are angry dealers who don’t want to be subject to oversight. And despite the tough talk about standing up to financial interests to pass this reform, it seems Obama has caved to America’s auto dealers.

Today, the White House released a statement, reported by Automotive News [sub] that said

The president vowed to fight efforts to weaken this bill and find ways to strengthen it, which is why he opposes carve-outs like this one that would exempt auto-dealer lenders from new consumer protections. 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

So, why did Obama speak out against dealer finance’s exemption from oversight if he was willing to cave on it? That, so far, is a mystery. And though the bill does cover a number of important issues outside of the car industry, this is definitely the wrong message to be sending. With GM already looking to subprime loans for sales growth, the temptation to goose sales with ever-riskier and more-exploitative loans, whether on the dealer or OEM level, is undeniable. Sales have been flat since mid-2009, and in the established order of business for the car industry, financial trickery is the first resort of a struggling firm. And if the last two years have taught us anything, it’s that redlining sales with creative lending creates unsustainable growth. If Obama figures less regulation at the dealer level will boost overall sales, helping GM go private and him get re-elected, he’d better consider the possibility of another car sales crash in his second term. And in the meantime, anyone who gets screwed by an unscrupulous dealer will have their president to thank.

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2 of 43 comments
  • M 1 M 1 on Jun 25, 2010

    For the record, dealers got an 11th hour reprieve. The bill will not affect them. The rest of the country is still screwed, though.

  • Bridge2farr Bridge2farr on Jun 26, 2010

    "Auto dealers want the right to rip people off on financing. Explains why few tears were shed when the Detroit Three peremptorily closed down 1,700 of the gypsies, tramps and thieves." A carefully crafted and researched proclamation. LOL

  • Frank Wait until the gov't subsidies end, you aint seen nothing yet. Ive been "on the floor" when they pulled them for fuel efficient vehicles back during/after the recession and the sales of those cars stopped dead in their tracks
  • Vulpine The issue is really stupidly simple; both names can be taken the wrong way by those who enjoy abusing language. Implying a certain piece of anatomy is a sign of juvenile idiocy which is what triggered the original name-change. The problem was not caused by the company but rather by those who continuously ridiculed the original name for the purpose of VERY low-brow humor.
  • Sgeffe There's someone around where I live who has a recent WRX-STi, but the few times I've been behind this guy, he's always driving right at the underposted arbitrary numbers that some politician pulled out of their backside and slapped on a sign! With no gendarmes or schoolkids present! Haven't been behind this driver on the freeway, but my guess is that he does the left lane police thing with the best of 'em!What's the point of buying such a vehicle if you're never going to exceed a speed limit? (And I've pondered that whilst in line in the left lane at 63mph behind a couple of Accord V6s, as well as an AMG E-Klasse!)
  • Mebgardner I'm not the market for a malleable Tuner / Track model, so I dont know: If you are considering a purchase of one of these, do you consider the Insurance Cost Of Ownership aspect? Or just screw it, I'm gonna buy it no matter.The WRX is at the top of the Insurance Cost pole for tuner models, is why I ask.
  • Mebgardner Wishing for the day of open source software in EVs, including the OS. Lets have some transparency in the algorithms and controls. No Fair data hoovering my phone when connected.I'm also wondering at the level of CANBus components in this vehicle.