WASHINGTON — Sen. Sam Brownback, R-Kan., notched a victory Monday when the Senate included his efforts to exempt certain car dealers from new consumer protection rules in the financial reform bill.
Brownback wants to make dealers who don't originate their own car loans immune from the reach of the bill's new Bureau of Consumer Protection.
As part of the Federal Reserve, the proposed agency would oversee nearly all loans and other financial products aimed at consumers.
"If you're concerned about having over-regulation and overreach by Washington, support my regulation." Brownback said on the Senate floor. "I thought this bill was directed towards Wall Street, not towards Main Street. I would just ask my colleagues to support Main Street on this one."
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President Obama, as well as consumer protection groups, opposed Brownback's measure.
Public Citizen, a nonpartisan political research and watchdog group, said in a recent statement, "Consumers have a right to be protected from lemon car loans just as surely as they do from lemon cars themselves."
Military organizations were particularly upset because they said that service members were often victims of predatory car loans.
Democratic Sen. Christopher Dodd of Connecticut, chief sponsor of the financial reform bill, said Monday that the Department of Defense "is telling us that our men and women in uniform are being ripped off."
Some car dealers were "unscrupulous," he said.
Brownback has said the car dealerships near military bases were already regulated by state agencies and the Federal Trade Commission.
He has urged service members who have been cheated "to seek out local and state authorities, which already handle these investigations."
Brownback had intended the car dealer exemption to be an amendment to the financial reform bill, which the Senate passed last week. The House had already done so.
But it got caught up in the political maneuvering to adopt the bill.
Instead of an amendment, it will become part of the Senate's instructions to the House and Senate negotiators charged with crafting a final Wall Street reform bill.
Accepting the instruction, which passed 60-30 with bipartisan support, was part of the cost of securing passage of the Senate bill.
The National Automobile Dealers Association praised the Senate's endorsement of the car dealer exemption, calling it a "vote in favor of consumers."
"Senators clearly understand that dealers are not lenders," the association said in a statement. "They do not underwrite, fund or service auto loans."
The auto industry has contributed more than $380,000 so far this year to 44 senators of both parties, according to Public Citizen.