Washington Post: Auto Dealers are Part of the Problem, Need to be Included in Overhaul of Financial Regulatory System

The Washington Post published this commentary from Susan Weinstock of the Consumer Federation of America.  Here is an excerpt:
By Susan K. Weinstock
Monday, June 14, 2010

Contrary to the commentary by auto dealer Tammy Darvish [“A fight on the front lines of the auto industry,” June 7], the point of the financial regulatory overhaul pending in Congress is not just about punishing those who wreaked havoc on our economy. It’s also about closing regulatory gaps to ensure that consumers get a fair deal in the marketplace.

One gap is whether automobile dealers who serve as creditors or brokers should fall under the purview of the new consumer financial protection agency.

A House and Senate conference committee will determine whether to side with consumers in making auto dealers subject to the law or to side with the auto lobbyists in exempting dealers.

Auto dealers, like mortgage brokers, can and do mark up the interest rate on a loan so that the buyer pays more than what he or she qualified for. Like mortgage brokers, auto dealers can decide which lender to use for the deal, and the auto dealer can decide to use the one that will pay the biggest markup. This business model makes the industry ripe for predatory dealers looking for easy money.

The gates to military bases around this country are often ringed with auto dealers just waiting to take advantage of easy prey — young adults with their first ever regular paycheck and their desire to buy a car.

Read more.