While following the financial reform legislation currently winding its way through the Senate, one seemingly unlikely but vocal opponent jumped out at me: car dealers. An article in The Wall Street Journal says that car dealers don't like the idea of the proposed Consumer Financial Protection Agency, or CFPA, having jurisdiction over their lending practices.
The dealers' trade group, the National Auto Dealers Association, or NADA, argues that the purpose of the bill is to prevent another Wall Street-led collapse of the economy, and because dealerships didn't play a role in the financial crisis, they shouldn't be included. And that dealerships are already regulated enough by the FTC and the Federal Reserve Board, thank you.
On the other side of the fight is an even more unlikely opponent: the military. They're angry about how dealers have treated military personnel in the past, arguing that predatory lending by car dealers has "hurt military readiness." The military want strict oversight in the new financial regulations and are lobbying senators hard to prevent an exemption for dealers (sponsored by Kansas Sen. Sam Brownback) from making it into the final bill. Brownback's bill would exempt new-car dealers but would still regulate sketchy "buy-here, pay-here" dealers and financial institutions that actually make car loans.
I'm torn on this one. The finance and insurance room, or F&I room, can be a scary, high-pressure place sometimes, and the potential for predatory lending there is every bit as high as in a mortgage broker's office. On the other hand, it may be enough to have the CFPA oversee the institutions offering the loan products dealers can sign you up for, sort of like the FDA regulating the production of your Doritos, but not the convenience store that sells them.
What do you think?