Senate negotiators have agreed to a House proposal to exempt auto dealers from oversight by a proposed consumer financial protection bureau.
The exemption for auto dealers was included in the House version of the financial-regulatory overhaul. It is opposed by the Obama administration and was not part of the Senate bill.
House-Senate negotiators, meeting for a third week to resolve differences between the two versions, devoted much of today to discussion of the powers of the new consumer bureau. The bureau, which would be housed in the Federal Reserve, would have independent powers to write and enforce rules banning abusive practices in credit-card and mortgage lending.
Auto dealers have been lobbying lawmakers to be excluded from oversight. The senators’ offer released today said they would accept the House exemption.
Senator Christopher Dodd and Representative Barney Frank, who are leading the negotiations and wrote the House and Senate versions of the legislation, had opposed the exemption. Frank said today he included the exemption in his offer to Senate negotiators because it “has strong support in the House.”
“The political reality is that those of us who have fought against an auto dealer carve-out can’t prevail,” Representative Luis Gutierrez, an Illinois Democrat, said today during the meeting.
House Democrats defeated Republican efforts to scale back other powers of the bureau. Negotiators considered a series of Republican amendments, including one offered by Representative Jeb Hensarling to prevent the bureau from banning a financial product or service. His plan was defeated 7-12.
“There are many flaws with the underlying creation of this new expensive, immense, powerful bureaucracy,” Hensarling of Texas said.
The committee of lawmakers is considering changes as they work to merge the bill the House approved in December with the version the Senate approved last month. The consumer bureau is based on an idea offered last year by President Barack Obama to create a standalone Consumer Financial Protection Agency as part of a package of proposals aimed at preventing a repeat of the 2008 economic crisis.
The proposed agency became the main sticking point as senators crafted their version of the bill and derailed bipartisan talks in February. Dodd, a Connecticut Democrat who is chairman of the Senate Banking Committee, offered to house the agency at the Fed in response to Republican concerns.
Negotiators tomorrow will take up proposed changes related to the so-called Volcker rule, language that’s included in the Senate bill to ban proprietary trading at U.S. banks. They said they plan to focus on June 24 on the section of the legislation dealing with derivatives oversight.
Frank, a Massachusetts Democrat, said it was important that lawmakers finish talks by June 24 so they can hold final votes in the House and Senate next week. He pointed out that Congress will be in recess the week of July 4.
“If we are not able to finish by Thursday, then this bill cannot pass until the middle of July,” said Frank. “We think that would be unwise from the standpoint of economic stability.”