Q&A: FTC consumer protection chief on new consumer financial protection bureau
Since the Federal Trade Commission was created in 1914, one of its main responsibilities has been to protect consumers from unfair and deceptive business practices. Perhaps its best-known achievement in recent years has been the National Do Not Call Registry, which allows consumers to get on a list that telemarketers are banned from calling.
In 2009, when Jon Leibowitz took over as chairman, the FTC made it a priority to crack down on so-called "last dollar" scams--efforts take advantage of those hurt by the downturn in the economy with false promises of jobs or debt relief.
With the new Consumer Financial Protection Bureau overseen by White House consumer czar Elizabeth Warren set to be up and running by July 2011, how will the FTC's role evolve?
Post reporters Cecilia Kang, Ylan Mui and I sat down Friday morning with David Vladeck, director of the FTC's Bureau of Consumer Protection, to discuss how responsibilities for protection consumers will change in the months ahead.
Before joining the FTC, Vladeck was co-director of the Georgetown University Law Center's Institute for Public Representation and spent nearly 30 years with the Public Citizen Litigation Group.
The questions have been edited for clarity.
How have you been preparing for the debut of the new Consumer Financial Protection Bureau?
We have been collaborating very closely with the folks at the Treasury Department... We've sent two of our star lawyers over there on detail to help the new agency get off the ground. These are two of our litigators over at our division of financial practices. Their role is to help shape the new agency's enforcement apparatus...
We've also been very actively involved with the new bureau's management in trying to develop their complaints system. One of the problems they face is that on the transfer day, they need to have a fully operational complaints system up and running... We have a complaint system that is accessed by literally hundreds of federal state and local law enforcement agencies. It has over 14 million separate entries.
How will the FTC's role in consumer protection change, if at all?
We are required by statute to enter into a Memorandum of Understanding on who is going to take dominance over what. Our jurisdiction is completely overlapping, with one asterisk...We're not generally engaged in rulemaking unless Congress says to us, FTC we want you to issue these rules on, say, mortgages...
To what extent will responsibility for cases about financial issues shift to the new bureau?
I've worked very hard for and support deeply the creation of the bureau. I think it adds enormous resources to consumer financial protection.... They've been given an enormous job. Their jurisdiction is vast, and not only did it have the payday loaners and the credit bureaus and debt collectors, they have every financial institution in the United States.
Even if they manage to get up and running and finally get the 2,000 employees they hope to sometime, there is no way in the world they are going to be able be a cop on all these separate beats...We both understand we need one another.... There are areas in which we've concentrated. I imagine when we sit down to write [a Memorandum of Understanding], they will say, 'You keep on doing that.'
What are your priorities in helping consumers?
Our first priority is to go after scam artists who are trying to take advantage of people rendered vulnerable by the financial crisis... Collectively there have been 300 or 400 cases by the FTC and our law enforcement partners...
Another priority is our privacy rethink, which is quite a substantial undertaking.
Congress recently gave the FTC the authority to write rules regulating auto dealer financing.
We will not have rulemaking authority over auto dealers until the transfer date [July 21, 2011]... We are already developing a strategic plan for this and meeting with stakeholders...
We will be going out to at least three cities outside of D.C. and holding workshops to try to get a very broad cross-section of views about where we are, what we need to do, what are the facts, what are the problems on the ground. We're checking all the [consumer complaint] data we've had over the years to get a sense of what's happening in the market.
What other priorities do you have when it comes to consumer financial protection?
One of the things we're spending a lot of time on now is debt. We have a number of very large investigations against debt collection agencies. We've just issued a report... We sent out [what were] essentially subpoenas to the nine largest debt companies in the United States... In the last 10 years you've seen the growth of a new industry. It's an industry that purchases and collects itself or resells debt.
The next big push is on debt. There's this huge bolus of debt moving through the economy, and we're seeing a huge uptick in complaints about debt collectors...
We don't have jurisdiction over the banks, but we do have jurisdiction over the people who are buying the debt. [When the new bureau is in place,] we could do a pincher attack. The new agency could look at the banks and look at their practices, and we could look at the debt buyers. We will join forces, I imagine, on a lot of these projects.
Ariana Eunjung Cha
| September 20, 2010; 6:00 AM ET
Categories: Consumer Financial Protection Bureau, Federal Trade Commission
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