VOL. 125 | NO. 121 | Wednesday, June 23, 2010
Tentative Consumer Deal Gives Auto Dealers a Break
JIM KUHNHENN | Associated Press Writer
WASHINGTON (AP) — In a setback for the Obama administration, House and Senate negotiators assembling a massive financial regulation bill are on the verge of excluding auto dealers from direct oversight by a new consumer protection bureau.
Under a proposed compromise from Senate Democrats, auto dealers would still be covered by federal truth-in-lending rules that would have to conform to regulations adopted by the consumer agency.
The Federal Reserve, which oversees truth in lending regulations, could adopt different rules but would have to explain its decision.
A House version of the overhaul bill excludes auto dealers without conditions. The Senate bill did not contain an auto dealer exclusion, but senators expressed their support for an exemption last month in a nonbinding vote.
The compromise, if accepted by House negotiators, would be one of President Barack Obama's most high profile losses in his efforts to overhaul Wall Street regulations. The main contours of the House and Senate bills generally match the administration's goals, but Obama has personally lobbied against efforts to carve auto dealers out of the consumer agency's jurisdiction.
The administration has even made a national security case, arguing that military personnel have been especially prone to predatory lending schemes by car dealers.
Auto dealers have used their high visibility in their local communities to fight inclusion in the bill. They say they only process the loans and then turn them over to other lending institutions to administer and service.
The exclusion would not apply to auto dealers that provide their own financing, such as Carmax, or to giant auto lender GMAC.
The discussion on excluding auto dealers is one of many negotiations under way in a joint House-Senate panel that is working out differences between the House and Senate bills.
Panel members must still iron out some of the most difficult differences, including how to regulate the complex securities known as derivatives and how far to go in restricting the investment activities of banks.
On Tuesday, Rep. Barney Frank, the joint committee chairman, and Senate Banking Committee Chairman Christopher Dodd prodded the panel to conclude its work by Thursday in time for Obama's appearance before the Group of 20 nations in Toronto this weekend.
"It would be a grave error for the U.S. to do things where we could be gamed by other countries," Frank, D-Mass., said.
Treasury Secretary Timothy Geithner made a similar point while testifying before the Congressional Oversight Panel, an independent committee established to look over Treasury's financial rescue fund. Geithner stressed the need for the United States to shape a consensus on international financial regulations.
"The reforms Congress is about to enact will be a good model for the world and will give us enormous credibility in trying to, again, pull the world to those higher standards," he said.
Associated Press Writer Marcy Gordon contributed to this article.
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