Consumer agency: We won’t ‘double-team’ businesses
Monday, January 23, 2012
WASHINGTON (AP) — Two government watchdogs that oversee consumer finance have inked a deal to avoid burdening businesses with overlapping regulations.
The new Consumer Financial Protection Bureau and the Federal Trade Commission said Monday that they will meet regularly, keep each other informed about their activities, share consumer complaints and cooperate when writing new rules.
The CFPB was created as part of the 2010 overhaul of financial rules. In July, it became the lead agency in administering several laws aimed at protecting consumers from unfair or deceptive financial products and services. It can write rules, study their effects and issue reports. Those powers previously rested with the FTC.
The FTC was criticized widely for failing to curb abuses by mortgage companies and others before the 2008 financial crisis. The commission brought a small handful of civil actions against mortgage servicers that foreclosed illegally on thousands of homeowners.
Under the new setup, both agencies will continue to enforce the consumer laws.
If a company misled consumers about the cost of a loan or tacked on illegal fees, for example, either the FTC or the CFPB could bring civil charges against it.
That overlap worries opponents of the new agency. They say it will increase costs and create confusion because businesses wouldn’t know which regulator is in control. Monday’s agreement aims to address those concerns.
“We have another cop on the beat, and this agreement ensures that businesses will not be doubled-teamed by two agencies,” FTC Chairman Jon Leibowitz said in a statement.
CFPB director Richard Cordray said both agencies “are motivated by the same thing: To do right by consumers.”
The deal was required under the financial overhaul, to address objections about redundant regulation. Business-backed trade groups such as the U.S. Chamber of Commerce had argued that the agency wasn’t necessary because the FTC already was responsible for protecting consumers.
The agreement also states that the agencies will to work together on law enforcement cases and cooperate on consumer education efforts — another responsibility that was shifted to the CFPB.
The CFPB became independent on July 21 but lacked a permanent director until earlier this month. Senate Republicans vowed to block any nominee until the agency’s structure was changed. They wanted to reduce the director’s powers by putting the operation under a bipartisan group of commissioners.
President Barack Obama used a recess appointment this month to install CFPB Director Richard Cordray. Now that it has a director, the agency can start overseeing non-bank companies such as mortgage servicers and those offering payday or student loans.