Exercising its first legislative veto over the Federal Trade Commission, the Senate voted overwhelming yesterday to kill the agency's used-car rule that would have required automobile dealers to give consumers more information about the cars they sell.
By 69-27, the Senate told the beleaguered agency that it could not go ahead with its rule primarily designed to protect consumers from dishonest car dealers. Developed after more than 10 years of study, the rule would require dealers to post a one-page sticker on all used cars to alert consumers about any known major defect of each car. The sticker would also tell consumers what warranty rights the dealer is offering.
Opponents of the rule, including the National Automobile Dealers Association, persuaded the Senate that the rule was unfair because, among other things, it would impose unnecessary paperwork and as a result increase automobile prices during a deep recession in the auto industry.
A similar fate for the rule is expected in the House when it votes on a veto resolution later this week or early next.
If the House goes along with the Senate, it will be the first time Congress has imposed a legislative veto over the FTC since it gained that power two years ago.
Commission officials immediately denounced the Senate vote and expressed concern that the action spelled similar trouble for a number of other FTC rules that are nearly ready to go to Congress for approval. Among these rules is a regulation that would force funeral directors to disclose greater price information on funeral services to bereaved families. A third rule would require garment manufacturers to give customers more complete instructions on how to care for clothes.
"The vote is a disappointment for the commission and a signficant setback for the American consumer," said FTC Commissioner Patricia P. Bailey who has been leading the commission's fight in Congress to keep the rule.
"If you can't get through Congress a measure requiring used-car dealers to tell buyers what they know about the cars they're trying to sell, then the outlook is exceedingly troubled" for the rest of the FTC's actions, Bailey complained.
The three-hour debate on the veto resolution yesterday took place in a nearly empty chamber, with no more than a handful of senators ever on the floor at one time and only six senators speaking out on the measure.
Leading the opposition to the veto was Sen. Bob Packwood, (R-Ore.), the chairman of the Senate Commerce Commitee. By vetoing the rule, Packwood argued, "in essence we are saying to the public we endorse shabby practices. We endorse cheats."
The chief sponsor of the veto, Sen. Larry Pressler, (R-S.D.), however, argued that the bill was so poorly drafted that "it will create a lawyer's paradise," not a consumer heaven, because of the 50-page regulatory document that accompanied the rule. "It can't be understood by dealers, let alone consumers," he said.
As a result, "people who have lawyers are going to get stronger while the little old lady who wants to buy a car is going to get weaker."
Both Virginia senators--Harry F. Byrd, (Ind.) and John Warner (Rep).--voted for the veto while both Maryland senators--Charles McC. Mathias (Rep.) and Paul S. Sarbanes (Dem.) vote against the veto and for the rule.