Senate pushes to exempt auto dealers from regulatory overhaul
Tuesday, May 25, 2010
As the two houses of Congress prepare to merge their financial overhaul bills, the Senate on Monday voted 60 to 30 to recommend that thousands of the nation's auto dealers be exempted from oversight by a new regulator for consumer financial protection.
Auto dealers have lobbied fervently to escape the reach of the consumer watchdog, arguing that existing regulators already have power to crack down on abusive practices and that the Senate bill would still cover firms that issue auto loans. The dealers won an exemption in the House bill passed in December, but they were not spared in the Senate version.
Monday's nonbinding directive resulted from a deal that paved the way for last week's final vote in the Senate on the financial overhaul bill.
Republicans agreed not to push for a vote on a controversial amendment offered by Sen. Sam Brownback (R-Kan.) that would have exempted auto dealers, and by doing so they prevented a vote on a contentious measure that would have prohibited banks from trading on their own accounts, a practice known as proprietary trading. In turn, Democrats agreed to hold Monday's procedural vote on Brownback's measure, which passed easily despite fierce White House opposition.
The vote came as Senate leaders prepared to appoint seven Democrats and five Republicans to meet in coming weeks with counterparts from the House to hammer out differences between new financial rules approved by each chamber.
Senate Majority Leader Harry M. Reid (D-Nev.) was scheduled to name the conferees Monday evening but unexpectedly did not. His office offered no explanation, other than a spokesman saying that "one or two more conversations need to occur before we appoint conferees."
The likely list of appointees, according to congressional aides and industry lobbyists, is expected to consist of lawmakers from the Senate banking and Agriculture committees, chaired respectively by Democrats Christopher J. Dodd (Conn.) and Blanche Lincoln (Ark.).
Other conferees were expected to be Democrats Tim Johnson (S.D.), Charles E. Schumer (N.Y.), Tom Harkin (Iowa), Patrick J. Leahy (Vt.) and Jack Reed (R.I.); and Republicans Richard C. Shelby (Ala.), Judd Gregg (N.H.), Bob Corker (Tenn.), Saxby Chambliss (Ga.) and Mike Crapo (Idaho), though the list was not yet finalized.
Congressional aides said they expect House Speaker Nancy Pelosi (D-Calif.) to name the House conferees after the Memorial Day break, with the committee convening soon afterward.
Pelosi will "definitely" push to televise the final negotiations, aides said Monday. The effort will be chaired by Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee, who has said he hopes to deliver a final bill to President Obama by July 4.
The House and Senate bills share broad similarities and largely reflect the administration's original blueprint unveiled last year.
Still, numerous issues remain unresolved, most notably a provision backed by Lincoln that could force the nation's biggest banks to spin off their profitable derivatives trading desks. An array of lawmakers, administration officials and regulators hope to see the language softened or dropped, but Lincoln has vowed to fight any effort to weaken the provision.
The two bodies also must resolve the question of whether to ban proprietary trading at banks. The Senate version authorizes a study of the issue but gives regulators leeway in deciding whether to prohibit such trading.
In another directive, senators voted 87 to 4 Monday to instruct conferees that any prohibitions placed on proprietary trading at financial firms not apply to insurance affiliates. Sen. Kay Bailey Hutchinson (R-Tex.), who sponsored the provision, said proprietary trading at insurance companies is typically far less risky and already subject to oversight by state regulators.
Staff writer Lori Montgomery contributed to this report.