Consumer groups want new federal credit agency to cover automobile financing

A group of 38 non-profit groups, including the NAACP, Consumer Federation of America and the Center for Responsible Lending, are asking the House Financial Services Committee to make sure automobile financing is included in the purview of a new Consumer Financial Products Agency. The consortium accuses dealers of predatory lending practices and want the federal government to include dealer financing with mortgages, credit and debit cards and other consumer financial products already covered in the pending legislation.

In an October 7 letter, the consortium said, “While the vehicles themselves have never been better, auto sales and financing practices have never been worse. Consumers desperately need federal protection from ubiquitous predatory auto lending practices and multibillion-dollar auto sales frauds.”

The National Automobile Dealers Association has been lobbying to have dealer financing exempted from the Agency’s purview, saying the abuses cited by the consortium, including racial profiling in determining interest rates, are already illegal and no further legislation is needed.

The new agency is being pushed by the Obama Administration and Rep. Barney Frank (D-Mass), chairman of the committee. In September, Frank said he planned to modify the administration’s plans for the agency and said car dealers would not be subject to regulation under his draft bill. However the National Automobile Dealers Association says Frank hasn’t gone far enough to exclude dealers.