President Obama signing the Wall Street Reform Consumer Protection Act into law gives us a good opportunity to look at the final upshot for car buyers. As we've talked about before on this blog, the dealers got a big fat exemption from the Consumer Financial Protection Bureau in the final financial reform law.
The National Automobile Dealers Association successfully argued they weren't a driver of the financial crisis (did you catch the pun?) and anyway, their loans performed well enough, so that proves auto dealers didn't engage in any of the types of crooked practices that got the mortgage industry in trouble.
Of course, there were probably other categories of financial products that you could say the same thing about, but didn't get an extra-special exemption because they don't have the same lobbying power.
That said, the White House, which had opposed the auto dealer exemption from the get-go, did a little saber-rattling earlier this week, according to a story in The Detroit News:
"One of the big objectives of the bill is to level the playing field," (deputy director of the White House National Economic Council Diana) Farrell told reporters at a White House briefing Tuesday.
"The auto dealer lenders will have a hard time competing with really very high fees or practices against" loans made by banks and auto lenders that will be subject to new oversight.
That situation will help ensure that "families are protected when they (get) new car loans, and we hope that will put the kind of pressure" on auto dealers to avoid excessive fees.
To which NADA basically said, "Go fly a kite":
"The unbelievably competitive auto finance marketplace already drives down the costs and fees for consumers," (NADA spokesman Bailey) Wood said.
"The new government agency may very well disrupt that market and end up hurting the very people it is looking to protect."
There is one silver lining for critics of the exemption: The FTC will be getting new rulemaking authority over auto dealers. In theory, that would mean stricter oversight, but it remains to be seen how they'll use that authority. However, it seems obvious to me that auto dealers didn't spend a boatload of money lobbying Congress to stay under the FTC because they believed it would be a more strict regulator than the CFPB.
What do you think? Would you feel better with the CFPB watching your back when you walk into your local dealer's Finance and Insurance Room? Or does it make no difference to you which "alphabet soup" agency is looking over dealers' shoulders?