The whole federal government gets behind stopping "predatory" lending

http://www.politico.com/news/stories/0310/34101.html

Pentagon brass want a new consumer watchdog agency to regulate auto dealers so they don’t rip off troops with predatory sales and shady financing deals. Democrats are hoping it’ll be hard for Republicans to oppose something Pentagon leaders want, at a time when troops are in harm’s way.

And there’s more: Payday lenders, check-cashing outfits and rent-to-own stores operate, for all practical purposes, free from federal regulation — and President Barack Obama wants to change that with a consumer agency that spans the world of finance from high to low.

[...]

The Pentagon’s concerns were raised in a Feb. 26 letter from Clifford Stanley, undersecretary of defense for personnel and readiness. He said that “unscrupulous” lending by auto dealers has hurt troops — and has even prevented them from being deployed, as some groups have documented. That may blunt the sympathy the National Automobile Dealers Association members received during the House debate.

“Predatory lending affects our military preparedness. That’s how outrageous it is to not include these guys” in the consumer entity’s oversight, Mierzwinski said. “It explains that this is not just some liberal position.”

The auto dealers aren’t taking it lying down.

“It is no surprise that Obama’s Department of Defense is endorsing the creation of an agency proposed by Obama’s Department of Treasury,” said Bailey Wood, a spokesman for the NADA.

“The practices enumerated in the DoD letter — ‘bait and switch’ financing, falsification of loan applications, loan ‘packing,’ etc. — are already illegal under both federal and state laws. The CFPA will not make these practices any more illegal. Creating new regulatory mandates on top of existing federal and state statutes will likely drive up costs, limit vehicle financing options and, for many consumers including service members, effectively eliminate their ability to obtain financing to meet their vehicle needs,” Wood said.

Mr. Wood is correct. The net effect will be to make buying a motor vehicle both more difficult and expensive.

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