Car dealers are the ultimate grassroots organization with plenty of money for lobbying and political contributions, so few were surprised last summer when Congress approved a financial reform bill that specifically exempted auto dealers’ financing from regulation.
The newly sworn-in Congress has six members — all Republicans — who currently own auto dealerships or have in the recent past. That is double the number of car dealers who served in the last Congress and troubles consumer groups who worry that the industry already wields tremendous power over government policy.
“They posture as being the party of Main Street, but a lot of them have ties to dealership chains that are publicly traded on Wall Street,”said Rosemary Shahan, president of Consumers for Auto Reliability and Safety (CARS).
Incumbents include Vern Buchanan of Florida, John Campbell of California and Bill Shuster of Pennsylvania. Freshmen members are Mike Kelly of Pennsylvania, Scott Rigell of Virginia, and Jim Renacci from Ohio.
No members of the U.S. Senate are current or former car dealers.
The lawmakers say their business-minded approach to government is an asset in crafting policy to help small and medium-sized businesses grow and create jobs.
“Much of what we do, if not everything we do, affects the business community — and they are the job creators,” Shuster told the Center. "Being an auto dealer gives you experience you can bring right to Congress. You have a sales background that you can use to convince other members and convince the community. You also have the experience of customer service."
Car dealerships are located in virtually every Congressional district and employ nearly 1 million people. Dealers tend to be influential members of local communities, important customers of small banks, and major advertisers in community newspapers and broadcast media. In 2009, a $3 billion program known as “Cash for Clunkers” boosted dealerships and automakers by offering consumers up to $4,500 to trade in old, gas-guzzling vehicles and buy new, fuel-efficient ones.
Last July, President Barack Obama signed into law the Dodd-Frank bill overhauling U.S. financial market regulation and creating the Consumer Financial Protection Bureau to prevent unfair and abusive financial practices by banks, payday lenders, mortgage lenders and debt collectors. While autos are typically one of the biggest financial transactions made by consumers, dealers successfully lobbied to win an exemption from regulation by the new consumer bureau.
Campbell, who once owned 11 dealerships in California and is a member of the House Financial Services Committee, took the lead in writing language to keep car dealers out of reach of the Consumer Financial Protection Bureau.
“We had nothing to do with what happened on Wall Street, so why should we be included in a Wall Street reform bill?” said Bailey Wood, spokesman for the National Automobile Dealers Association (NADA). “I’m not saying that all dealers are angels, but there are already multiple levels of protection for consumers.”
“Congressman Campbell’s amendment was fair and rational,” added Libby Krum, a spokeswoman for another big industry group, the American International Automobile Dealers Association.
The House ethics committee in late January dismissed allegations that Campbell held fundraising events posing a conflict of interest when the financial reform bill was being considered. The panel found no impropriety in the fundraising events, nor any violation of law or standards of conduct. In a statement, Campbell said he had “consistently maintained that there has been no wrongdoing” and was pleased that the matter was resolved.
In December, the Federal Election Commission filed a campaign fraud lawsuit accusing a Hyundai dealership previously owned by Buchanan of reimbursing employees and others for political donations. Because Buchanan was not named in the lawsuit, his spokeswoman, Sally Tibbetts, said she could not comment further on the issue but noted the campaign brought the issue to the FEC more than two years ago.
She also declined to comment on several lawsuits that have been filed against Buchanan by former employees in recent years, alleging pressure to contribute to his political campaigns. None of the lawsuits went to trial.
To maintain allies in Congress, auto dealer groups have spent nearly $22 million on Washington lobbying since 2005, according to the Center for Responsive Politics, including $3.7 million in just 2010. They also are big contributors to political campaigns. Dealers gave more than $4.7 million in campaign contributions to federal candidates in the 2010 election, splitting their donations nearly evenly between Democrats and Republicans.