Chamber calls on agencies to divide new consumer protection abilities

By Peter Schroeder - 06/20/11 01:58 PM ET

The U.S. Chamber of Commerce is calling on the Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission (FTC) to divvy up responsibilities before the CFPB goes live in July.

In a letter sent last week to Treasury Secretary Timothy Geithner and FTC Chairman Jonathan Leibowitz, the business lobby warned that the Dodd-Frank financial reform law created "substantially overlapping enforcement authority" for the two agencies. If the two bureaus do not coordinate, it could prove burdensome to American business both within and outside of the financial sector, the chamber warned.

Given the "very substantial" risk of overlapping regulators, the chamber called on the two agencies to coordinate and put into writing how they plan to coordinate. Doing so as soon as possible will enable the two agencies to avoid redundant work, while informing those being regulated of which agency will be doing what.

In particular, the chamber wants the FTC to primarily regulate "Main Street" businesses, while the CFPB should focus its efforts on the financial sector.

The chamber contends in its letter that the CFPB, created by Dodd-Frank, is being built with financial expertise in mind, so it makes sense it should watch Wall Street. Meanwhile, the FTC has "deep experience" overseeing nonfinancial businesses, and should continue to utilize that expertise, the chamber said.

The group also dismissed indications from officials of the two agencies, including CFPB architect Elizabeth Warren, that the two bureaus would divide casework on a case-by-case basis. It warned that such an ad hoc approach would produce "waste and confusion" while bringing nothing to the table in terms of benefits.

"We understand that it is difficult for any government agency to agree that it will not exercise authority that it possesses, but in this situation ... an unwillingness to defer to one another ... is unjustified and, in today's era of greatly constrained government resources, an irresponsible use of valuable taxpayer funds," it wrote. "The Chamber strongly believes that there simply is no basis for the view that only an ad hoc process can ensure that consumers are protected."

Rather, responsibilities should be codified in a "memorandum of understanding" between the two agencies, it said.