Manufacturers Line Up to Fight Financial Reform

May 17, 2010
To allay fears, Senate offers to exempt manufacturers from government oversight into risky financial practices.

One might not think of Harley-Davidson as the face of opposition to the financial reform bill currently working its way through Congress, but the motorcycle manufacturer has joined a group of industrial organizations far from Wall Street that are fighting to rework the legislative language.

From Mars, the maker of M&Ms and Snickers, to eBay, to Caterpillar and General Electric, a surprising combination of companies have united against financial regulation because they claim it would inadvertently harm their businesses.

The reform bill, as currently constituted, runs over 1,400 pages long, and proposes, among other measures, a council of regulators to identify companies that have leveraged themselves to dangerous points that threaten the broader financial system. If identified, the council could force it toward liquidation or mandate that it put more capital in reserve, according to a report in The Washington Post on Monday.

In response, Sen. David Vitter (R-La.) proposed an amendment that would exempt any companies that earn less than 85% of their revenues from financial services, an effort aimed specifically at manufacturers.

"I have a big concern about the bill overall that it is overreaching and bringing in a lot of sectors of the economy way beyond true financial firms," said Vitter. "My amendment is one attempt to correct that."

Already, the provision has received positive reactions from the National Association of Manufacturers (NAM) and the U.S. Chamber of Commerce, who point to Harley-Davidson, John Deere and Caterpillar, all of whom provide financing for their customers. The NAM and Chamber of Commerce argue these manufacturers shouldnt be penalized for the recklessness of American International Group (AIG).

However, the Senate is also considering the case of GE, who offers tens of billions of dollars a year in customer loans through a subsidiary. Last year, only a small percentage of GEs financing was directed toward customers purchasing its manufactured products.

Similarly, auto dealers have loudly opposed the bill and are requesting an exemption from legislation that would treat them as financial lending institutions subject to new federal regulations.

Senator Christopher Dodd (D-Conn.), the chairman of the Banking Committee, described these concerns as a "red herring" sparked by opponents on Sundays NBC show "Meet the Press." The legislation, he said, wouldn't harm ordinary businesses or ultimately lead to lost jobs.

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