Wheeler Dealers

Elizabeth Warren rides again. Her enemies claim she is tilting at windmills, but actually she keeps saddling up to tame predatory financial giants. Not entirely quixotic, except in Washington’s eyes.

As an academic she hatched the idea of a Consumer Financial Protection Bureau. In the wake of the 2008 meltdown, President Obama embraced the notion and tapped Warren to help design the new bureau. She was widely expected to be its first administrator.

Many members of Congress, however, hated the whole idea of the bureau, watered down its powers and effectively vetoed the appointing of Warren as it’s head. They rightly feared she might know enough to be dangerous and take her duties seriously.

She answered this rejection by winning a senate seat from Massachusetts, where she has refused to go along to get along. Her passion remains the protection of consumers from financial abuse. Good luck with that.

Banks, brokers, mortgage lenders, the usual villains in her crosshairs, are liable to some oversight, albeit tepid, from the CFPB. But one group that regularly takes advantage of consumers is all but exempt from regulation — auto dealers.

They were specifically left out of the Bureau’s mandate at the last minute thanks to a parliamentary trick spearheaded by small-government crusader Sen. Sam Brownback. He is now the governor of Kansas where his low tax, no service philosophy has bankrupted the state and is well on its way to making Kansas resemble the third world.

Warren is now seeking to impose greater regulatory oversight on car dealer loans which have been called the largest unregulated debt for most consumers. Anyone who has bought real estate knows there are pages and pages of disclosure documents to sign and warnings to borrowers about what they’re getting into and how much their loans will cost them over time.

More to the point, all other lenders face penalties if they don’t play by the rules. Auto dealers, not so much. And Warren is having very little success in drumming up support for her legislation to make the dealers accountable. Similar rules were rejected for inclusion in Dodd-Frank in 2010, not because there was no need for them but because Congress had zero interest in passing them. Why?

Politico notes that “the $730 billion auto-dealer industry enjoys a special status. Auto dealers are in every district, employ more than a million people and are often local and family owned — which adds up to huge leverage in Washington.”

That’s sugar-coating the reality somewhat. The auto dealers’ immunity to regulation is bought and paid for. Dealers and their trade organizations and PACs spent $17 million during the 2012 election cycle on contributions to congressional candidates. Another $3.5 million was spent on lobbyists whose job is to cajole and threaten Congress in order to prevent any meaningful oversight or regulation of auto dealers’ lending practices.

In the 2013-2014 campaign cycle, the top recipients of auto dealer largesse included House Speaker John Boehner, $120,000, Senate majority leader Mitch McConnell, $77,000. and North Carolina Senate candidate Tom Tillis who was helped to unseat Kay Hagen by $91,000 from the car dealers. Do you suppose he’s found a way to express
his gratitude?

If all that money slopping around the halls of Congress isn’t enough, the car dealers have lobbyists inside Congress itself so the arm-twisting can be up close and collegial. Florida Republican Rep. Vern Buchanan has a net worth of $37 million, largely from a half dozen car dealerships. Rep. Mike Kelly (R-PA.) is worth at least $9 million due to his dealerships. The same goes for multimillionaire car dealer representatives Scott Rigell (R-VA.) and John Campbell (R-CA.)

This is the way Congress works. Its seats are filled with wealthy men and women, self-made or heirs to the family fortune, who keep a watchful eye on any legislation that might hold accountable the industry that made them rich. They make sure no one regulates its assaults on the constituents they are supposed to be representing.

So on any given day the auto dealer representatives help keep the banks that enrich their colleagues unregulated and vice versa. The cable and wireless moguls join the oil heirs in keeping those industries unimpeded by oversight. There are aways several doctors or heirs to pharmaceutical or hospital fortunes seated in Congress where they can make sure the health care industry is armored against any attempt to protect consumers, no matter how sick they are.

Warren and all such reformers haven’t got a chance. Nor do the rest of us. Unless we want a nice deal on a brand new car. Just drive her off the lot, and don’t worry about the fine print. The financing is an even sweeter ride than the car itself. Would a car dealer steer you wrong?

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