President Obama suffered a political defeat late last week from members of the National Automobile Dealers Association, who successfully had themselves excluded from the financial regulations that are proposed to stop the reckless practices of Wall Street that caused the ongoing Great Recession.
Dealers who provide their own funds for loans would have been treated just like banks, credit unions and other auto lenders under the bill.
NADA was unhappy that what started as Wall Street reform legislation would “unfairly increase federal regulation over dealerships and potentially eliminate dealer-assisted financing.” (See NADA Fighting Wall Street Financial Reform )
The White House, Pentagon, the Department of Treasury and other consumer interest groups fought strongly to regulate auto dealers.
Among other things, the bill would create a new Bureau of Consumer Financial Protection, and curb abusive practices such as ‘bait and switch” where one interest rate or down payment is advertised, but much higher ones substituted.
There are also rules governing other questionable ploys, such as the failure to pay off liens on trade-in vehicles, or conditional loan agreements. These are all reasonable propositions say consumer advocates.
However, the largely Republican members of the National Automobile Dealers Association, who have spent more than $3 million lobbying in “pay to play” Washington since last year, successfully defended their interests. (more…)