Reporting from Washington
As Congress formally began the process of merging Senate and House versions of massive financial regulatory overhaul legislation, the Senate on Monday voted to instruct its negotiators to largely exempt auto dealers from oversight by a new government agency designed to protect consumers from shady lending.
The House included such an exemption in its version passed in December. But auto dealers and their supporters were not able to get a vote on such an exemption in the Senate.
The Senate voted 60-30 on Monday to instruct its 12 representatives on the conference committee reconciling the two versions to include the exemption in the final bill. The vote does not bind the Senate's negotiators, although it shows the preference of a majority of the chamber's members.
"They are the quintessential Main Street business in the country," said Sen. Sam Brownback (R-Kan.), the main backer of the exemption, who argued that auto dealers did not cause the financial crisis. "There's not a single auto dealer on Wall Street."
Senate Banking Committee Chairman Christopher J. Dodd (D-Conn.), who will be one of the key negotiators on the final bill, opposed the exemption. He noted the strong opposition by top Pentagon officials, who have written senators in recent weeks opposing the amendment. Those officials said the military receives frequent complaints about auto dealers who take advantage of service members.
The Senate on Monday also voted 87-4 to instruct its conferees to loosen some restrictions in the legislation for insurance companies engaging in so-called proprietary trading, the practice of making financial deals with a firm's money for the benefit of the company itself rather than clients. The measure was pushed by Sens. Kay Bailey Hutchison (R-Texas) and Kay Hagan (D-N.C.).
Auto dealers and banks are among the groups continuing to lobby for changes as the attempt to enact the most sweeping overhaul of financial rules since the Great Depression heads into the homestretch.
The legislation attempts to prevent a repeat of the recent financial crisis and avert the need for future bailouts by creating a new consumer financial protection agency, enacting tough new regulations for complex financial derivatives and giving regulators the authority to seize and dismantle large firms whose failure would pose a danger to the economy.
The House and Senate versions of the legislation are mostly similar, but there are some key differences, including the auto dealer exemption and creation of a $150-billion fund, paid by large financial institutions, to cover the cost of dismantling troubled institutions.
House Financial Services Committee Chairman Barney Frank (D-Mass.) will chair the conference committee, his spokesman said Monday. The process is expected to move quickly, with the goal of getting a bill to President Obama's desk by July 4.
The legislation is a top priority for Obama, who vowed last week that his administration would not allow the package to be weakened during House-Senate negotiations.
The Senate is expected to name its conferees this week. The House is not expected to do so until early next month, although that will not prevent Frank's staff from negotiating with staff for Dodd and other Senate conferees in coming days.
Frank and Dodd promised a public conference committee process, in which proposed changes and agreements reached during private negotiations would be presented to conferees in open session for discussion and votes.