WASHINGTON — In the end, the political clout of 18,000 auto dealers scattered nationwide was too much even for President Barack Obama.
- Jenna Dewan-Tatum Dishes on Joe Manganiello's Magic Mike XXL-Inspired Wedding Dance to Wife Sofia Vergara
- George Lucas Reveals He Still Hasn't Seen New Star Wars Film - and Explains Why Greedo Shot First
- Emerald City! Kylie Jenner Debuts New Green Hair Color at Lip Kit Launch
- The Time Has Come ... to Pick Gigi Hadid and Zayn Malik's Couple Name
- Audrina Patridge's Engagement Ring Is on Full Display on a Date with Fiancé Corey Bohan
House and Senate negotiators putting final shape to a sweeping overhaul of Wall Street regulations all but agreed Tuesday to exclude auto dealers from the oversight of a consumer financial protection bureau.
"The political reality is that those of us who have fought against an auto dealer carve-out can't prevail," Representative Luis Gutierrez, D-Ill.
The House bill approved last December contained an exemption for auto dealers, among others, from lending regulations issued by the proposed consumer agency. The Senate did not, but the sentiment was there. In a 60-30 nonbinding vote last month, senators called for the auto dealer loophole.
Under a compromise offered by Senate Democrats Tuesday, auto dealers would still be covered by federal truth-in-lending rules that would have to conform to regulations adopted by the consumer agency.
The Federal Reserve, which oversees truth-in-lending regulations, could adopt different rules but would have to explain its decision. At the same time, the Federal Trade Commission would be given authority to write new rules for auto dealers under accelerated procedures.
But the bottom line would be that auto dealers would be exempt from direct supervision by the consumer financial protection bureau. The exclusion would not apply to auto dealers that provide their own financing, such as Carmax, or to giant auto lender GMAC.
The Senate did reject a House proposal to exclude pawnbrokers and employee benefit and compensation plans from the consumer bureau's oversight.
But it also rejected a House proposal to place such financial businesses that are not banks, such as payday lenders and check cashing agencies, under consumer bureau enforcement. The Senate version would require the consumer agency to write rules for those firms, but enforcement would be left to states and the Federal Trade Commission.
Senate Banking Committee Chairman Christopher Dodd, who is shepherding the Senate version of the bill, said he didn't care for the loopholes but that he had to accommodate the political interests of senators.
"If I wrote the bill on my own it would cover all of these guys," he said.
The Senate auto dealer compromise, if accepted by House negotiators, would be one of Obama's most high profile losses in his efforts to overhaul Wall Street regulations. The main contours of the House and Senate bills generally match the administration's goals, but Obama has personally lobbied against efforts to carve auto dealers out of the consumer agency's jurisdiction.
The administration has even made a national security case, arguing that military personnel have been especially prone to predatory lending schemes by car dealers.
Auto dealers have used their high visibility in their local communities to fight inclusion in the bill. They say they only process the loans and then turn them over to other lending institutions to administer and service.
The National Auto Dealers Association continued to press for the House exclusion, objecting to the Senate proposal's requirement that the Fed's truth-in-lending rules hew to those issued by the consumer agency and that the FTC be given the authority to write auto dealer rules on a fast track.
"Eliminating the existing safeguards is a sweeping change that Congress shouldn't attempt at the eleventh hour," NADA spokesman Bailey Wood said.
Travis Plunkett, legislative director of the Consumer Federation of America, said the Senate compromise creates a dual track system, one for auto dealers and another for all other lenders that could result in regulatory gaps.
"It's an attempt to make lemonade out of lemons and it's very complicated," he said.
The discussion on excluding auto dealers is one of many negotiations under way in a joint House-Senate panel that is working out differences between the House and Senate bills.
Panel members must still iron out some of the most difficult differences, including how to regulate the complex securities known as derivatives and how far to go in restricting the investment activities of banks.
The Senate on Tuesday rejected a House proposal to provide mortgage assistance for unemployed homeowners. Rep. Barney Frank, the joint committee's chairman, said he would resubmit the proposal to the Senate, this time offering to pay its $3 billion cost with a fee on large banks and large hedge funds.
The fee also would pay for a $1 billion neighborhood stabilization program.
Frank and Dodd prodded the panel to conclude its work by Thursday in time for Obama's appearance before the Group of 20 nations in Toronto this weekend.
"It would be a grave error for the U.S. to do things where we could be gamed by other countries," Frank, D-Mass., said.
Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.