Magazine article American Banker

Industry Fears Mount over Answering to FTC, State AGs

Magazine article American Banker

Industry Fears Mount over Answering to FTC, State AGs

Article excerpt

Byline: Stacy Kaper

WASHINGTON - A House panel approved two bills Wednesday that would expand the power of the Federal Trade Commission and state attorneys general, fueling bankers' concerns that consumer protection could be headed for enforcement outside of the traditional banking agencies.

The bills, which were approved by the House Energy and Commerce subcommittee on commerce, trade and consumer protection, were aimed at closing consumer protection gaps in consumer credit and data security.

Though their sponsor, panel Chairman Rep. Bobby Rush, said that neither bill is meant to cover insured depository institutions, industry representatives said Wednesday that the legislative language was ambiguous and would create a problem if enacted.

They said the bills are the latest attempt by Congress to sever consumer protection from the banking agencies' purview as they seek ways to revamp the regulatory structure.

"You are seeing a resurrection of consumer issues that have been around for some time," said Oliver Ireland, a partner with the law firm Morrison & Foerster and a former Federal Reserve Board lawyer.

The bill on consumer credit and debt, which passed 16 to 9 along party lines, would give the FTC expedited rulemaking authority to target unfair or deceptive acts or practices and to obtain civil penalties, which state attorneys general could enforce.

The data security bill, which passed by voice vote, would require the FTC to issue data-protection and breach-notification requirements that it and state attorneys general could enforce.

During the vote, Rush sought to dispel industry fears that the bills would encroach on current federal regulations for banks. "The manager's amendment ensures that other federal laws are applicable to companies and their data products where appropriate," he said. …

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