The Senate voted Monday, May 24, 2010 to exclude auto dealerships in the financial overhaul bill. If passed, consumer auto loans through the dealership won’t be regulated by the proposed Consumer Financial Protection Agency. President Obama will reportedly receive the bill to sign by July 4.

The vote signals a time for increased vigilance on predatory lending. Further, it is imperative for consumers to continue to take personal responsibility when it comes to their financial awareness even when the Consumer Financial Protection Agency is there for them.

A potential concern is that the Consumer Financial Protection Agency may result in individuals believing the government will fully, effectively protect them from predatory lenders. Suddenly, it may create less individual incentive for American citizens to conduct personal, independent due diligence when it comes to credit and loans, which could possibly pose a moral hazard.

In addition to the potential moral hazard, at this juncture, the agency does not have full oversight of loans, as evidenced by the Brownback amendment. Sponsored by Sen. Sam Brownback (R-KS), the amendment, as mentioned, exempts auto loans from being included in the Consumer Protection Agency. It is fairly difficult to create law that can completely protect consumers from potential predatory lending.

Consumers could be taken advantage of in greater numbers if the agency results in consumers let down their guard resulting in less financial awareness, while a potential for predatory lending remains. It is incumbent upon individuals to continue to take personal responsibility for their own financial awareness.

The soon-to-be created Consumer Financial Protection Agency would be most effective if it monitored the unfair practices of lenders…but, in the end, my fear is that it could become an agency that will not have the full industry oversight required to do so. Whether the amendment passes or not, consumers should not rely exclusively on the government to protect them. It is their personal responsibility to continue increasing their financial awareness.

But, most important is when you walk into a car dealership, know what you can afford – not what the most expensive car the dealer car “get you into.” Consider all your expenses before you buy a car.