Last week, in remarks to the US Chamber of Commerce, Federal Trade Commission (FTC) Chairman Jon Leibowitz sought to defend the Consumer Financial Protection Bureau (CFPB) to one of the CFPB’s primary opponents. Indeed, during the speech, Chairman Leibowitz quipped that the FTC and the CFPB would be so busy focusing on “bottom feeder” companies that the agencies would not have the resources to excessively regulate “legitimate” businesses.
As has been reported previously, The Dodd-Frank Wall Street Reform and Consumer Protection Act created the CFPB to serve as the primary regulatory authority over consumer financial products and nearly every federal consumer financial protection law. The CFPB and the FTC will share regulatory authority over nondepository institutions, and also coordinate enforcement efforts through a negotiated memorandum of understanding - the difference is that the CFPB will have a budget that dwarfs that of the FTC. The CFPB is scheduled to begin its regulatory operations on July 21, 2011, and the President, with Senate’s consent, must still appoint a single director to run the agency for a five-year term.
In the speech to the Chamber of Commerce, Chairman Leibowitz acknowledged that the CFPB’s broad power, independent (and large) budget, and enormous staff should cause anxiety within the business community. However, Chairman Leibowitz noted that these fears are unfounded primarily because the Obama Administration has signaled a more pro-business direction following the 2010 mid-term elections.
Actually, the biggest signal of the CFPB’s impact on business will likely occur when the President nominates the Director of the CFPB. The Director, in conjunction with White House Special Advisor Elizabeth Warren, will set the culture and policies for how the CFPB’s broad authorities will be applied.
Chairman Leibowitz envisioned a regulatory world where the FTC and CFPB will work collaboratively to “weed out crooks and scam artists who divert dollars from legitimate businesses.” He would like for the two agencies to focus on “fly-by-night ‘foreclosure consultants’ taking advantage of struggling homeowners, debt collectors engaged in illegal harassment, and payday lenders failing to disclose outrageous fees.” Given those priorities, he remarked that the remaining “legitimate” businesses should be subject to limited regulatory burden. The future will show whether Chairman Leibowitz’s more powerful, and yet to be determined counterpart at the CFPB will share this regulatory vision.