June 2, 2010
United States Senate
Washington, DC 20510
As a conferee on the financial reform bill, you will certainly be hearing from the auto dealers about their interest in being exempted from the new Consumer Financial Protection Agency. We maintain that only auto dealers who act as brokers or creditors in the financing of a car should be covered by the new agency and we want to take this opportunity to set the record straight.
Exempting auto dealers from oversight by the Consumer Financial Protection Agency, whether they originate the loan or sell the loan, is bad for consumers and anti-competitive. The auto dealer exemption would allow the status quo to continue, in which rulemaking and enforcement of consumer protections for auto dealers is fragmented and ineffective, thereby allowing unscrupulous dealers to continue targeting US military personnel and communities of color with predatory auto loans. The exemption also would create an uneven playing field where auto loans issued by community banks and credit unions are subject to CFPA rules, but loans originated by auto dealers are not. Finally, the exemption undercuts reputable auto dealers and other lenders who have nothing to fear from the CFPA.
The list of opponents to this exemption is long, and we have attached letters from Undersecretary of Defense Clifford Stanley, Secretary of the Air Force Michael Donley, The Secretary of the Army John McHugh, , The Military Coalition (31 organizations representing 5.5 million current and retired service members and their families), the Leadership Conference on Civil and Human Rights, and the National Council of La Raza, as well as the Independent Community Bankers of America and the Credit Union National Association, all of whom oppose this carve-out. We’ve also attached two fact sheets that further explain why auto dealers should be included in the CFPA’s oversight.
Retaining auto dealers under the CFPA’s jurisdiction as in the Senate bill will support our Service members and their families, communities of color, and all consumers who can and have been taken advantage of when purchasing a car from an auto dealer.
Again, thank you and we look forward to continuing to work with you to ensure that all Americans have appropriate protections against unscrupulous lending.
Americans for Financial Reform