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Auto Dealer Exemption Removed from Senate Wall Street Reform Bill

Automobile

By Kathleen Myers

In light of the United States economic crisis, the government is seeking to improve financial and consumer regulations. In December 2009, the House of Representatives passed their version of the Wall Street Reform bill and on Thursday, May 20th, the Senate passed their version with a 59-39 vote. 

This bill seeks to hinder abusive consumer lending, particularly in the mortgage industry, and to ensure that troubled companies can be liquidated at no cost to taxpayers. The bill also creates a “financial stability oversight council”, the Bureau of Consumer Financial Protection, to help identify risks in the financial system. 

If enacted, the bill would police how auto dealers write car loans. Auto dealers would have additional regulations in place and would be subject to the new consumer protection agency. Auto dealers have argued that they are merely intermediaries between the consumer and the banks who actually finance the deals and thus should not be subject to the oversight of the agency. 

In the House version of the bill, auto dealers were excluded from the heighten consumer regulations. The Senate version of the bill originally also included an exemption for the auto dealers, but it was withdrawn Republicans and was slated to be revisited on Monday, May 24th. After discussions on the 24th, the Senate voted in favor of the auto dealer exemption. Although the Senate bill was already passed on May 20th, this non-binding vote shows the Senates backing of excluding dealers from the new financial reform. 

With the support of both the House and Senate, it is likely that auto dealers will be exempt from oversight by the Bureau of Consumer Financial Protection on the final bill that will go to the President. However, it has been noted that President Obama and the Department of Defense have strongly opposed the exemption of auto dealers from this lending reform. Final decision will be made during the House and Senate negotiations, which are expected to begin in two weeks. 

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