Key Democrats Wary of Federal Trade Commission Authority Shift

Key Democrats on the House Energy and Commerce Committee are skeptical of the Obama administration's proposal to create a new Consumer Financial Protection Agency that would take over most of the Federal Trade Commission's authority to prevent abusive mortgage lending practices. "I have significant concerns about these plans," Rep. John Dingell, D-Mich., said at a hearing. "FTC has done superb work in protecting consumers and this country will not benefit from a diminished mandate to that agency." Committee chairman Henry Waxman, D-Calif., said a new approach to consumer protection is "clearly warranted." But the chairman said the FTC's ability to perform its consumer protection function should be strengthened, "not weakened." Republican members strongly oppose claims the CFPA would "strip" the FTC of its authority over consumer financial products and create a "new tax" on all consumer credit providers. It appears that House Financial Services Committee chairman Barney Frank, D- Mass., will have to address Rep. Waxman's concerns in drafting a CFPA bill. Some industry groups also oppose the creation of a new consumer protection agency. The American Financial Services Association is recommending that Congress leave enforcement authority with the federal banking agencies and give FTC back-up enforcement authority. "The FTC should be granted authority to step in if the prudential regulator fails, or is unable, to address consumer protections in a timely manner," AFSA president and chief executive Chris Stinebert testified.