If you have a yellow "Support Our Troops" sticker on your car - or even if you don't - you should know the name of the Senators who just traded in our troops, their families, and our military readiness for the easy cash offered by auto dealers. There's no rational policy reason for this exclusion: It's special interest politics, pure and simple. These Senators acted against the objections of military leaders and Gen. Petraeus' wife Holly. But they're not just voting to hurt soldiers: Every American who buys a car on credit is likely to suffer if this "instruction to Senate negotiators" prevails.
Call it "clunkers for cash." Auto dealers are generous with their campaign contributions, both individually and as a group. And they're usually community leaders, active and influential in local politics (and local campaign giving). The National Auto Dealers Association, the lobbying group for new and used car vendors, called the tune and these solons danced. Take a look at the Association's leadership and then ask yourselves: Would you buy a used Senator from these men?
You know why Americans place car salespeople at the very bottom of the list when asked to rate professions for honesty and ethics? Probably because they've bought a car. And they don't know the half of it. They may not have heard about about the "dealer add-in rate," for example, where dealers are allowed to add points on the interest rate and keep it for themselves (i.e. quoting you 10% interest when the bank's only charging 8%, and keeping the difference.) The Center For Responsible Lending estimates that these markups (which they rightfully call "kickbacks") cost consumers $20 billion a year and added $647 to the price of each vehicle (pdf)
They also may not know about the way dealers handle "gap insurance" for cars, which pays the difference between what your auto insurance covers and the remaining cost of your loan if a car is totaled. Dealers reportedly charge three times as much for this insurance as credit unions.
Then there's the awkward reality of racial discrimination: 54% of African Americans were charged these markups, vs. 31% of whites. This continues a long-standing discriminatory pattern: A six-year study of 300,000 Nissan loans performed in 1991-2000 showed that African Americans in 33 states consistently paid more for their loans, regardless of credit history.
Think about it: If they were acting honorably and fairly, why would auto dealers object to being treated like other lenders? If this resolution prevails, credit unions, community banks, and other responsible lenders will be at a disadvantage when competing with predatory auto dealers who don't have to play by the rules.
Twenty-one Democratic Senators sided with all of the Republicans to back a measure from GOP Sen. Sam Brownback to direct Senate negotiators to exclude auto dealers from the consumer financial protection group that will be created in financial reform. The measure is nonbinding because the bill has already passed, but it increases the momentum for protecting auto dealers from oversight, which the House bill already does.
My Senator, Barbara Boxer, voted in favor of the measure - and her office is going to hear from me about it. So did Sen. Majority Leader Harry Reid, who defied his own President and the Departments of Defense and Treasury. Coincidentally, I received a fundraising email from Sen. Boxer today, asking me to donate money to Sen. Reid's reelection campaign. The title of the email is "Leadership." Barbara Boxer and Harry Reid will have to do better than this in the "leadership" department.
Reid's vote indicated that, when it came to pleasing auto dealers, the Senate's "manager was in a good mood." It probably didn't hurt that Sen. Reid received $16,845 in campaign contributions from auto dealers during the 2004-2009 period, plus another $5,000 from the auto dealers association so far this year. That may not seem like a lot, but auto dealers raise a lot of third-party cash for politicians too. And hey - they may not offer many bargains, but they know how to find one. For her part, Sen. Boxer's only received $4,000 as of last report, but she's up for re-election this year and there's still plenty of time. (2004-2009 contribution info is here; auto dealer association information is here.)
The Brownback resolution is the handiwork of the auto dealers' lobbying group - whose acronym, NADA, happens to be Spanish for 'nothing." The nihilistic ring seems appropriate for a group that would cavalierly ignore the pleadings of military leaders and a General's wife. Holly Petraeus' objections to the auto dealer exemption were widely reported in Stars and Stripes and elsewhere. She has said of all predatory military lenders (a group which includes many auto dealers): "I feel strongly that our service members earn that paycheck, that's not very large, in the most dangerous way possible, and for somebody to pick their pocket is disgraceful."
The Pentagon explained to these Senators why ""soldiers who are distracted by financial issues at home are not fully focused on fighting the enemy, thereby decreasing mission readiness." They didn't care. Researchers explained the abuse and deception that occurs when car dealers lend money. They ignored it. Studies proved that African Americans receive discriminatory treatment from these lenders. They backed them anyway.
Here are the Senators who voted for this resolution, along with their contributions from auto dealers in the years 2004-2009. (There was plenty of money given out before and after those dates, too; and the political clout dealers have in local politics produces a lot more cash than is visible in these numbers).
There are names I respect on this list, and probably some that you do too. All the more reason to take action. Feel free to contact them and let them know what you think of their decision to support auto dealers over soldiers, military families, and you:
Alexander (R-TN) - $47,150
Barrasso (R-WY) - $12,186
Bayh (D-IN) - $15,450
Begich (D-AK) - N/A
Bennett (R-UT) - $15,997
Bond (R-MO) - $13,550
Boxer (D-CA) - $4,000
Brown (R-MA) - $300
Brownback (R-KS) - $14,786
Bunning (R-KY) - $15,500
Burr (R-NC) - $56,541
Cardin (D-MD) - $25,900
Cochran (R-MS) - $8,000
Collins (R-ME) - $21,232
Conrad (D-ND) - $11,000
Corker (R-TN) - $115,900
Cornyn (R-TX) - $133,341
Crapo (R-ID) - $11,000
DeMint (R-SC) - $71,500
Ensign (R-NV) - $18,900
Enzi (R-WY) - $11,000
Graham (R-SC) - $21,950
Grassley (R-IA) - $10,750
Gregg (R-NH) - $7,450
Hagan (D-NC) - $7,100
Hatch (R-UT) - $27,600
Hutchison (R-TX) - $64,993
Inhofe (R-OK) - $20,750
Johanns (R-NE) - N/A
Kerry (D-MA) - $85,334
Klobuchar (D-MN) - $1,500
Kohl (D-WI) - N/A
Kyl (R-AZ) - $101,050
Landrieu (D-LA) - $9,750
Lautenberg (D-NJ) - $2,800
LeMieux (R-FL) - N/A
Lieberman (ID-CT) - $33,000
Lugar (R-IN) - $7,875
McCain (R-AZ) - $622,459
McConnell (R-KY) - $24,700
Menendez (D-NJ) - $17,750
Mikulski (D-MD) - $11,500
Murkowski (R-AK) - $16,100
Murray (D-WA) - $7,500
Nelson (D-FL) - $40,600
Nelson (D-NE) - $11,350
Pryor (D-AR) - $24,350
Reid (D-NV) - $16,845
Risch (R-ID) - $11,000
Roberts (R-KS) - $13,150
Rockefeller (D-WV) - $4,000
Sessions (R-AL) - $27,750
Shaheen (D-NH) - $2,900
Shelby (R-AL) - $2,400
Snowe (R-ME) - $7,700
Specter (D-PA) - $29,950
Thune (R-SD) - $106,898
Vitter (R-LA) - $59,023
Voinovich (R-OH) - $19,650
Wyden (D-OR) - $29,000
Richard (RJ) Eskow, a consultant and writer (and former insurance/finance executive), is a Senior Fellow with the Campaign for America's Future. This post was produced as part of the Curbing Wall Street project. Richard also blogs at A Night Light.
He can be reached at "rjeskow@ourfuture.org."
Website: Eskow and Associates