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Dealers Move Closer to Exemption
From Wall Street Reform

May 25, 2010

WASHINGTON — The United States Senate demonstrated bipartisan support for auto dealers on Monday, voting 60-30 to approve a “motion to instruct” lawmakers to include the Brownback Amendment in future versions of the financial regulation bill. The amendment, authored by Sen. Sam Brownback (R-Kan.), seeks to exempt auto, marine and RV dealers from sweeping lending practices reforms.

“I am pleased that both the Senate and the House have taken positions on the financial regulation bill to include language to prevent car dealerships from being subjected to redundant regulations,” Brownback said. “It simply does not make sense to treat auto dealerships like financial institutions. Auto dealers are a part of Main Street, not Wall Street, and they are not responsible for the financial meltdown.”

The motion to instruct is a nonbinding but pivotal vote as the legislation heads to committee, where differences in the Senate and House versions will be worked out. Phil Brady, president of the National Automobile Dealers Association, was encouraged by Monday’s vote after months of campaigning on behalf of the organization and its associated dealers.

“Senators clearly understand that dealers are not lenders — they do not underwrite, fund or service auto loans,” Brady said. “They also realize that jurisdiction of the Bureau of Consumer Financial Protection over auto dealers is unnecessary because dealers are already effectively regulated by the Federal Reserve, the Federal Trade Commission and state agencies.”

Third-party financing currently represents about 90 percent of all auto loan originations in the United States, including financing through captive and independent lenders, finance companies and credit unions.

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