Rep. Barney Frank’s attempt to exclude auto dealers from regulation by a proposed consumer-financial protection agency isn’t good enough, the National Automobile Dealers Association (NADA) said.
Frank, D-Mass., chairman of the House Financial Services Committee, spearheaded efforts to modify the “Consumer Financial Protection Agency Act of 2009,” legislation which would create the federal agency. He listed a number of businesses that would be excluded from the federal agency’s regulation, including auto dealers.
However, in Frank’s draft bill a subsection titled, “Exclusion for Auto Dealers,” does not exempt financial transactions by auto dealers, according to the NADA.
“Instead, the draft bill essentially only excludes car brokers (i.e., people who buy vehicles on behalf of other people),” the NADA’s Vice President of Legislative Affairs David Regan wrote in a letter to Frank.
“There is also a “merchants” exception (Section 124(a)) which potentially would encompass auto dealers, but careful reading of this subsection similarly reveals that transactions involving financing would not be exempt. This is hardly an exception for auto dealers, as 94 percent of all new vehicle purchases involve financing.”
In addition, the NADA said the proposed agency would create more restrictions for the auto finance market, which is already regulated by the Federal Reserve, the Federal Trade Commission and the states.
“In light of the current credit crisis and lowest auto sales in a generation, a dramatic restructuring of the laws governing auto finance would create uncertainties, unintended consequences, and increase consumer costs that could further depress sales,” the association said. “NADA will have no choice but to oppose the bill as currently drafted and support alternative amendments.”