The National Automobile Dealers Association has political muscle, and it wasn’t afraid to use it to obtain the highly sought-after auto dealer exemption from Consumer Financial Protection Bureau oversight. NADA spokesman Bailey Woods told Automotive News that House and Senate committees made the right decision, as the CFPB would make dealer financing for auto loans more involved and ultimately more expensive. As it stands, it’s Christmas in June for auto dealers; they lobbied and Congress delivered.
Auto dealer exemption from CFPB oversight
The CFPB will have jurisdiction over mortgages, credit cards and other forms of consumer credit like payday loans, but the auto dealer exemption will leave dealer financing out of the new government agency’s hands. Arranging auto loans in-house will be unhindered for those dealerships with the capability, but the CFPB will still keep watch on banks and credit unions that work with auto dealers. The Federal Trade Commission still supervises auto dealers, but those in Congress who sought to bring dealer financing under CFPB scrutiny are dissatisfied with that system, as it takes the FTC as long as eight years to enact significant change. This is due to additional reviews the FTC must perform that are not required of federal agencies.
Rep. Barney Frank bemoaned the lack of votes
Barney Frank and other House Democrats wanted auto dealers to be put on a leash, as did President Obama, the Pentagon, military families, consumer rights and civil rights grounds, indicates Automotive News. Yet NADA’s lobbying turned things around for auto dealers, particularly considering where the finance bill began. All that the organization got for their trouble was a concession that the FTC could speed up their standard-writing process for auto dealers. This still will not protect consumers from some of the practices of dealer finance that some call shady. Auto dealers, on the other hand, call it making a living.
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