04/04/2010 05:12 am ET | Updated May 25, 2011

Republican Lawmaker Already Failed Luntz Memo On Regulatory Reform

In a memo guiding congressional Republicans on how to defeat financial regulatory reform, conservative messaging guru Frank Luntz strongly suggested framing the legislation as punctured with lobbyist loopholes and a giveaway to special interests.

"The American people are tired of add-ons, earmarks, and backroom deals -- but they are mad as hell at 'lobbyist loopholes,'" Luntz wrote. "Why were pawnbrokers exempted?" he added, as a prospective question that skeptical lawmakers should ask. "What about car dealers?"

Well, it turns out, we already know why the House of Representatives added an exemption for car dealers to its financial reform legislation -- a Republican lawmaker wanted it.

Rep. John Campbell (R-Calif.), who has received more than $233,000 in campaign donations from the automobile industry, collects rent from his former automobile colleagues and is a former Saab dealer, secured an amendment in the bill that exempted car dealers from a newly created consumer financial agency. He did so by getting his GOP colleagues and freshmen Democrats on the House Financial Services Committee to support the measure. And then, when the amendment was added, he voted against the final product.

In short, this was exactly the type of regulatory reform "loophole" that Luntz urged Republicans to vilify. Only in this case, it was a Republican who offered it.

Bailey Wood, a lobbyist for the National Automobile Dealers Association, explained to the Huffington Post several weeks ago why he thought the car dealer exemption was necessary. And his reasoning reflected all of the paranoia that has erupted over the proposed Consumer Financial Protection Agency.

"[W]hen the concept of CFPA started coming out there were a lot of things that frightened us -- the agency has almost unfettered authority that I don't know if Congress intended them to have," said Wood. "They have no secretarial oversight, not under the Commerce Department ... the CFPA had the authority to come into a dealership and say 'I'm sorry, you have red carpeting on the floor, red carpeting is not conducive to wise decisions so [you] must change that carpet to blue or green' ... The size was frightening to us. John Campbell recognized that."

With additional reporting by Arthur Delaney