In the House Wall Street Reform bill passed last Friday, there is added authority for the Federal Trade Commission. The Wall Street Journal takes this gift of new powers to task in an editorial today:
Buried in the House financial reform is a provision that would muscle up the FTC and radically expand its mission. Pushed by liberal barons Henry Waxman and Barney Frank, the language would empower the FTC to impose civil penalties on companies that are first-time offenders and make it easier for the agency to concoct new rules. The law, supported by FTC Chairman Jon Liebowitz, would also invest the agency with the power to independently litigate civil penalty cases rather than going through the Department of Justice.
The idea is to create a more activist regulatory model a la the Securities and Exchange Commission. That's not necessary: Repeat offenders can already be hit with civil penalties, and in fraud cases the FTC can get an order from a judge tying up assets, thereby making civil penalties superfluous. The FTC also has the power to pass rules for which civil penalties are the standard remedy for violation. In still other instances, Congress can specify civil penalties. [...]
Imaginative lawmakers will have all sorts of ideas for how to use the new powers. Earlier this year, Congress asked the FTC to do a rule addressing mortgage scams and other practices. What next? Rules for obesity, violent video games and behavioral advertising?
The Senate should bear these concerns in mind as it wrestles through writing its own version of financial services reform.
Read the whole WSJ piece here.