Dems Grill FTC Head: "What Happened?"

On Tuesday, members of a House subcommittee lamented the weakness of consumer protection from predatory lenders -- be they credit card companies, payday lenders, or subprime mortgage-peddlers -- and said improved regulation would have prevented the current economic crisis.

"For the past decade if not longer, American consumers, particularly low-income Americans, have been swimming in shark-infested waters," said Rep. Bobby Rush (D-Ill.), chairman of the subcommittee on commerce, trade, and consumer protection. Lenders "sold their snake oil by taking advantage of circumstances people faced, or with outright deception. Unfortunately, there wasn't a strong enforcement or regulatory authority at the federal level protecting consumers from these abusive practices. The result has been a wrecked economy and, I might add, wrecked lives."

"These schemes were allowed to happen in part because of a fierce anti-regulatory
ideology that was held by the Bush Administration," said Rep. Henry Waxman (D-Calif.), who added that the ideology contributed to disasters from Hurricane Katrina to tainted food.

Jon Leibowitz, chairman of the Federal Trade Commission, appeared before the committee to answer for the government's role in protecting consumers from those sharks in the water.

"What happened at the FTC?" Rush asked Leibowitz. "Why didn't the FTC take aggressive actions against mortgage lenders in the earlier part of this decade?"

"Sometimes the simplest questions most difficult ones to answer," Leibowitz said. "We are a tiny agency by Washington standards ... We have 270 attorneys doing consumer protection ... and we cover the entire waterfront of the economy."

Leibowitz said the FTC has performed well but that it could do better. "Could we have done more? Yes."

The FTC's rulemaking ability should be expanded and the agency should be given authority to bring lawsuits in federal court independently of the Justice Department, Leibowitz said. The FTC supported a bill introduced last year by Sens. Byron Dorgan (D-N.D.) and Daniel Inouye (D-Hawaii) that would have brought about such changes.

Rush spokeswoman Sharon Jenkins told the Huffington Post that new legislation reauthorizing the FTC will come up this year. "They're making a concerted effort to talk to all the stakeholders," Jenkins said.

"It's very encouraging that Congress is seriously considering expanding the FTC's authority," said Deepak Gupta, a lawyer with Public Citizen. A real climate of reform is taking hold in Washington, said Gupta, who points also to a recent proposal by Senate Democrats to create a "Financial Products Safety Commission" to protect consumers from predatory lenders.

"People are waking up to the fact that deregulation is a major contributing factor to the economic crisis," Gupta said.

Comments

[Dredd]

Part of the old "regulation" was bankruptcy law.

Debtors who had to file bankruptcy would wipe out all credit card debt.

The republican controlled congress before the 2006 election, along with Bush II, changed that and tried to make a sort of debtors prison out of credit card use. After that became law, debtors could no longer easily wipe out credit card debt.

This encouraged credit card companies to get ever one hooked. We know what happened then don't we?

[brandnewstuff]

WTF_- The FCC and FTC where paid Under BUSH to IGNORE ALL LAWS and BE LAWLESS and that includes Raping of Constitutional Laws- Texas is the WORSE VIOLATOR_ not amusing! Criminal Backstabbing Bastatrds$­$$$$$$$$$$­$

[PhilipTaylor]

DEMS show they want to Help THE 99.9% of Americans NOT on Wall Street?

$1,000 to WS [NOT =] $1 to Main Street! Injustice! Inequity!

$3.5 Million Average every 4 years to Each Congress Person. More for WS Committee!

This is NOT "Rocket Science!" The only Complexity is the Banks and AIG Linkages!

WS Banks do NOT help Main Street Americans and CHARGE 30+% Interest!

Isolate WS Banks like the "Cancer" they are and build Credit Flows, "like Bypass Surgery", directly to Americans from Credit Unions, Community Banks, & Government Bank at Low RATES and FEES!

NOT "1" Executive/­Manager/An­alyst/Sale­s Person Fired, Fined, Investigated, or Prosecuted!

Many of the CROOKS left January 20 but still more to GO!

What about the Thousands on Wall Street? They have to GO!

[marthainmaine]

Bush did cut way back but deregulation of the banks came in 1999 under Clinton , with Larry Summers putting the deal together. It was the repeal of Glass/Stegall which gave banks the ability to speculate in wall street real estate etc.

So the Obama/Clinton administration is more of the same. Larry Summers fixing the problem he caused is humor worthy of bush Jr.

[treetracker]

Repeal of Glass Steagall gave them the opening to merge banking with financial securities and insurance so they could become giants "too big to fail." The securities speculation came later - another Gramm bill (under Bush) - that provided there would be no oversight on these securities. Both bills were Republican legislation and the repeal of GS was rolled into an 11,000 page bill that Clinton signed at the end of his term in office. That does not relieve him of the responsibility of signing it and he may have even been for it. And many "moderate Dems" voted for it as well. But the deregulation lies squarely at the foot of the GOP. That is their mantra, now they have to live with its consequences.

[AddyGmom]

And dubya, et al, had no power to insert rules and regs?

[lydia]

Don't agree with you, my understanding is that the Gramm/Leach/Bailey Act of 1999 that did away with the Glass Steigel Act of 1933 was passed though under Clinton's watch but had a Republican VETO PROOF majority.

Can't keep blaming Clinton, Bush had two terms and eight years to fix the problem before the snowball started down the hill, but his snout and that of Cheney was so deep in the trough they weren't prepared to stop Wall Street raping Main Street. Bush never said once that Wall Street behavior was unconscion­able/repre­hensible, instead his smirking "Wall Street got greedy" defense was indicative that he believed they would have gotten away with the barefaced robbery of the taxpayers had Wall Street not been too greedy and double dipped.

[hotwire]

I swear Waxman was in one of the Harry Potter movies. What was that characters name?

[NTexasHillbilly]

Henry Waxman.

[ej3]

Under Bush the "Regulators" rewrote Janis Joplin to say that doing nothing means there's nothing left to do. It wasn't a case of a fox in the chicken coop but rather the boys and girls from a multinational packing plant coming in to rule the roost. It wasn't that business was the business of government but rather that government was subject to a takeover by business.