UPDATED · News · 24 May 2026 · Michael Harrison
The Hill blog reports that 62 House Democrats are urging lawmakers to pursue an auto dealer exemption in light of upcoming financial reforms being considered by the Consumer Financial Protection Agency (CFPA). The movement, organized by New York Reps. Bill Owens and Mike McMahon, goes against the wishes of the White House, Defense Department and Treasury Department. It would effectively shield auto finance companies from CFPA oversight and allow auto dealers to maintain the freedom to set lending rates and continue to utilize industry-standard lending practices. Auto dealers will only be able to continue offering dealer-assisted financing if red tape is kept to a minimum, argue pro-auto industry groups.
Auto dealer exemption: Is it about helping consumers?
According to BNet.com, the proposed auto dealer exemption from CFPA financial reform may save dealers money and allow them to pass the savings on to consumers in the form of lower auto finance rates, but the potential dark side cannot be ignored. The auto finance industry as a whole is big business. Ample evidence suggests that potential gains from the subprime market have seduced auto dealers into lower their auto loans underwriting standards. Their fee structures have also drawn the attention of the Better Business Bureau on numerous occasions, says the National Consumer Law Center.
Giving auto dealers an unfair advantage over other lenders
An auto dealer exemption would give dealerships an unfair advantage over banks, credit unions and other auto loans outlets, claims BNet. As the CFPA would have the power to set rates for everyone outside of dealer-assisted finance circles if the exemption were to pass into law, car dealers could exploit this for their own gain. Customers would likely not get the best deal from aggressive dealer finance groups. If a dealership were to close in this still difficult economy, they would also be able to violate agreement terms more easily without CFPA supervision. An example would be failing to pay off existing loans on a trade-in. Consumers deserve better protection than that, argues BNet; the FTC and government agencies already in place have proved insufficient in their efforts to stand up for Joe Car Buyer.
Dealer assisted financing is dominant and consumers are largely uninformed
Knowing that better options exist is the key to getting the best deal on auto loans. The non-partisan Cambridge Winter Center for Financial Institutions Policy recognizes that “auto dealers actively market and price borrowers’ loans,” which is why so many consumers buy into their product. A level playing field would make it easier for consumers to find the auto loans that are right for them, without worry of exploitation. Giving the Consumer Financial Protection Agency jurisdiction over auto finance would conceivably make that a reality.
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President Obama’s initial call for financial reform:
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