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How Car Dealers Wiggled Out of the Democrats’ Consumer Protection Bill

2:20 PM EST on December 30, 2009

Auto loans and leases account for a major chunk of the U.S. financial market -- one nonpartisan research group recently pegged American car debt at $850 billion, larger than the entire credit-card industry. So perhaps it shouldn't be surprising that car dealers' lobbied themselves an exemption from the new consumer watchdog included in the House financial reform bill that cleared the House earlier this month.


But how did the loophole for auto dealers sail through the House Financial Services Committee, winning by a margin of more than 2 to 1 despite the opposition of panel chairman Barney Frank (D-MA)? An excellent piece by two of the Huffington Post's political reporters offers a frustrating answer to that question:

[G]roups like the auto dealers don't bring with them to Capitol Hill thepublic-relations baggage of Wall Street or Goldman Sachs. "The localauto dealers are very popular in their districts," Frank says. The morean interest group can make an issue district-specific and the more itcan relate on an everyday level, Frank argues, the better it will do. ...

"What's happening now is the pro-regulation forces are beingout-grassroots-ed by the antis," Frank says. One member, he says,represented tons of title insurance companies. Another came from theheadquarters of credit unions. A third's district is home toLexisNexis; another to Equifax. Each of those entities received specialtreatment because their representative sits on the committee -- and themore members on the committee, the more special treatment is needed. "Ihave not had a problem because of campaign contributions. The problemis democracy: it's people responding to people in their districts:community bankers, realtors, auto dealers, as I said, end users,insurance agents," says Frank.

For the HuffPost, the auto-dealer victory serves as a window into a broken legislative system dominated by lobbyists' priorities and lawmakers' re-election concers. But the dealers' loophole also serves as a warning for environmental groups, sustainable transportation advocates, and any voter who wants to see emissions caps and fuel-efficiency rules remain as strong as possible.

Without an aggressive, coordinated strategy to avoid being "out-grassroots-ed" by polluting industries, as Frank put it, the forces of reform are likely to watch more exemptions be carved out as the legislative process moves forward. Auto dealer groups were unafraid to take credit for their ability to muscle Congress; one wonders if their clean-transport counterparts can do the same.

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