ABA Examines Proposed Consumer Financial Protection Agency
On the expected eve of the Senate passage of the financial regulatory bill, certain elements — including what a consumer protection agency would look like under the Senate bill— are becoming clearer. However, the Senate and House will still need to come to agreement on final language.
Even without regard to what the final law looks like, it will take time to see how disclosure provisions will play out in actuality, what “abusive practices” really mean, how state attorney general offices will work within the confines of new federal regulation, and whether a new law will actually prevent a mortgage crisis from happening again.
During the 58th Annual ABA Section of Antitrust Law Spring Meeting April 22-24 in Washington, D.C., experts explained what the proposed Consumer Financial Protection Agency looked like under the House version of legislation, including what transactions were included under the “financial activity” definition, what professionals and activities were exempt from the new governing body and its authority, and how an early draft of the Senate bill matched up in terms of management and funding of a proposed new agency.
Moderator Mark Plotkin, Covington & Burling LLP; and panelists Julie Brill, commissioner, Federal Trade Commission; Alan Frankel, director, Coherent Economics and senior advisor, Compass Lexecon; Timothy Muris, O’Melveny & Myers LLP; and Andrew Smith, Morrison & Foerster, engaged in a lively discussion.
The speakers spoke to the issue of how rulemaking authority for a new agency would be implemented, whether mandatory arbitration was called for in the draft bill and whether the FTC’s power would be expanded through the creation of the consumer agency.
Frankel commented that President Barack Obama hoped new legislation in this area would allow the average person to “compare products and know exactly what they’re getting themselves into.” But to that point, panelists later stated that there was “no one answer as to whether consumers knew what was going on” when they were signing up for a mortgage that often later proved to be unsound. Some consumers were tricked; certainly some were aware, noted one panelist.
Another question posed to the panelists was whether a standalone agency was the right avenue to take to address the mortgage crisis. Some panelists gave a flat out “no” in response; others stated that it would help heighten attention to the problem, and still another said the problem was not one of consumer protection but rather that the private sector was making inappropriate loans.
Whether or not a financial regulatory bill that includes a consumer protection agency indeed becomes law, much remains to be sorted out in the years to come.
For more coverage of the 58th Annual ABA Section of Antitrust Law Spring Meeting, view “Global Concerns Take Center Stage at Antitrust Spring Meeting.”