While the FTC has historically attempted to bring some enforcement actions against some of the bad actors in the consumer credit marketplace (most notably Associates, Household and Fairbanks), their lack of staff and resources, and more importantly the lack of political will at top of their agency has minimized the effectiveness of the results of these actions. Had the FTC been willing, like the Massachusetts Attorney General in its Fremont case, to use its “unfairness” authority to declare the lack of underwriting, risk-layering, poisoned products pushing business model that was prevalent in the mortgage market to be a violation of the FTC Act, a real stand could have been taken against our nation’s corrupt mortgage lending system.

And as Chris Peterson articulated:

If the federal government is going to succeed in comprehensively modernizing and reforming our consumer finance laws, it is likely that one of two plausible paths must be followed. First, Congress could attempt to pass a large, highly technical, and controversial bill that implements the needed changes across nearly a dozen different statutes, through many committees, and over the objection of powerful financial services industry advocates. Or second, Congress could pass the heavy and more technical lifting on such reforms to an administrative agency. [...] The current crisis suggests that it may be time to seriously consider proposals calling for a new regulatory authority tasked with an exclusive focus on financial consumer protection.

We expect a House version of the Financial Product Safety Commission, that very game-changer agency (also supported by Rheingold) to be introduced this week by Reps. Bill Delahunt (D-MA) and Brad Miller (D-NC).