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

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 the
public-relations baggage of Wall Street or Goldman Sachs. "The local
auto dealers are very popular in their districts," Frank says. The more
an interest group can make an issue district-specific and the more it
can relate on an everyday level, Frank argues, the better it will do. …

"What’s happening now is the pro-regulation forces are being
out-grassroots-ed by the antis," Frank says. One member, he says,
represented tons of title insurance companies. Another came from the
headquarters of credit unions. A third’s district is home to
LexisNexis; another to Equifax. Each of those entities received special
treatment because their representative sits on the committee — and the
more members on the committee, the more special treatment is needed. "I
have not had a problem because of campaign contributions. The problem
is 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.


Dems, Obama Pushing Back Against Car Dealers’ Consumer Loophole

Auto dealers lobbied hard to win an exemption from the new consumer protection agency created by Congress’ pending financial reform bill, but their free pass could fall by the wayside today as senior Democrats and President Obama press for a crackdown on deceptive lending practices in all industries. (Photo: The latest salvo in the […]

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