Last night's passage of the "Restoring American Financial Stability Act of 2010" (S. 3217) in the Senate was remarkable for many reasons, but what may be most remarkable is what's not in the bill: an exemption from accountability for auto dealers. Despite the fact that auto dealers act as lenders that broker and structure the terms of the car loans they sell, they shamelessly pelted the Senate with demands to be excluded from the oversight and accountability to be delivered by the Consumer Financial Protection Bureau (CFPB).
Civil rights, consumer, labor, and public interest groups banded together with military family organizations, credit unions, and community banks in opposition to this special interest carve-out. The pressure worked. Senator Brownback's (R-KS) amendment to create a loophole for auto dealers never came to a vote. As it stands in the Senate bill, auto dealers will be held to the same standards as the banks and credit unions they compete against for auto financing business.
Our fight is not over, however. Senator Brownback now plans to bring a nonbinding motion to instruct the conferees to include his amendment. Certainly this would please the legions of car dealer lobbyists bombarding Capitol Hill to carve out their piece of the pie. But a vote for the motion is a vote for car dealers to remain unaccountable for dubious behaviors, of which many consumers are all too familiar.
The Senate must continue to resist their pleas and set laws into motion that target consumers' needs, not those of special interest groups. This legislation is particularly important for communities of color, many of whom have been steered by auto dealers toward risky loans with higher-than-necessary markups and other abuses that I have discussed in detail in earlier posts.
The House and Senate bills will need to be reconciled. Congress should bring together the strongest elements of both bills to create true reform. We hope the conferees take their cues from the Senate and put families before lobbyists. If they reject backdoor deals that benefit special interests, this legislation will stand as a solid step forward to improve Wall Street, auto lots, and families' expectations for their financial future.