House Committee Passes Financial Services Abuse Bill - Broadcasting & Cable

House Committee Passes Financial Services Abuse Bill

Will create a new financial services oversight agency, give new powers to FTC
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By a vote of 33 to 19, the House Energy & Commerce Committee passed a bill to create a new financial services oversight agency and to give the Federal Trade Commission new powers to pursue deceptive and misleading practices, and to do it more quickly.

It also adds "abusive" to the definition of targettable offenses as a way to address conduct that does not fall easily under the definitions of false and misleading conduct. It allows the FTC to go after those who aid and abet such conduct.

The bill is targeted to financial services abuses connected to the financial meltdown, but ad industry lobbyists fear it is an expansion of powers without sufficient vetting of the consequences, and that advertisers and media companies could be targeted by the aiding and abetting provision.

Adopted as part of the bill was an amendment proposed by Committee Chairman Henry Waxman (D-Calif.) that gives the FTC independent litigation authority for civial penalty actions, an authority that FTC Chairman Jon Leibowitz had asked for.

Currently, the FTC must first contact the Justice Department, which has 45 days to decide whether it wants to file suit. If it does not, then FTC can proceed. But Leibowtiz said that could delay action on conduct harming consumers. The committee's Democratic majority agreed.

Amendments were defeated that would have stripped out the streamlined rulemaking authority the bill grants the FTC or at least put in a few checks in the form of mandatory deliberation of the economic impact of their action.

The bill gives the FTC more streamlined rulemaking authority; establishes aiding and abetting liability for unfair or deceptive practices; and gives it civil penalty authority.

But what Waxman saw as removing barriers to a more nimble and responsive consumer protection agency flexible enough to deal with changing practices, the ad industry, and numerous Republicans, saw as removing procedural safeguards over an agency that ranges over the length and breadth of interstate commerce.

Republicans also opined that the bill was another example of expanding the size of government.

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