The Senate Committee on Commerce, Science, and Transportation (“Committee”) held its first full Committee hearing of the new session on February 4, 2010 to explore the Federal Trade Commission’s (“FTC” or “Commission”) role in consumer protection, with a focus on the financial services and products arena. FTC Chairman Jon Leibowitz participated in the hearing as the sole witness before the Committee. This hearing is part of a larger debate concerning the scope of authority of the Commission. At the end of last year, the House passed a bill that would expand the Commission’s authority as a part of H.R. 4173, the Wall Street Reform and Consumer Protection Act. That bill would grant the Commission broader powers including new rulemaking and independent litigation authorities. The Senate is expected to address these issues through FTC reauthorization legislation. It is expected that this reauthorization measure would be considered separately from the Senate’s financial reform legislation. The bills would likely be married on the Senate floor at a later date.
Laying the foundation for the hearing, Committee Chairman Jay Rockefeller IV (D-WV) announced that as Chairman of the Committee he would not stop until consumer protection has become a cornerstone of the economy. He explained that the purpose of the hearing was to explore what tools the Commission needs to further this goal. He recounted how weak protections in the financial services sector had contributed to the financial crisis. He also lamented that consumers had been overwhelmed by insufficient disclosures and fraudulent practices, and had been harmed by aggressive online sales tactics. Chairman Rockefeller opened the floor to Chairman Leibowitz to provide the Committee with his views on how the Commission could play a greater role in regulating the financial services industry to protect consumers against these practices.
Chairman Leibowitz emphasized that the Commission is the only Federal agency whose sole objective is to protect consumers. To further the Commission’s mission, he asked the Committee for the following additional tools: (1) civil penalty authority; (2) Administrative Procedure Act rulemaking in place of Magnuson-Moss rulemaking procedures; (3) authority to pursue aiders and abettors; and (4) more authority to provide consumer protections in the financial services arena. When asked by Chairman Rockefeller for his views on the proposals from the House to increase FTC authority, Chairman Leibowitz again expressed his support for these additional tools as well as his support for independent litigation authority. Chairman Rockefeller did not indicate when a bill to reauthorize the Commission would be introduced in the Senate, but such a bill is expected in the upcoming months.