Lawyer for payday lenders confirmed for FTC job


WASHINGTON – The new director of the Federal Trade Commission’s consumer protection unit, a watchdog with broad investigative powers over private companies, stands out even in an administration inclined to cede regulatory authority to pro-industry players.

Director Andrew M. Smith recently represented Facebook, Uber and Equifax – all companies before the board – and plans to recuse himself dozens of cases now that he has been confirmed for the post.

And in 2012, Mr Smith was also part of the legal team that defended AMG Services, the payday lender founded by convicted racketeer Scott Tucker, whose predatory practices against impoverished borrowers ultimately resulted in a legal settlement of 1 , $ 3 billion, the largest in the history of the commission.

“It is outrageous that the FTC is choosing the lawyer for a payday loan company of a criminally convicted racketeer as the head of consumer protection,” said Senator Elizabeth Warren, Democrat of Massachusetts, who spoke out. opposed to the selection of Mr. Smith. “The agency should choose someone who has a proven track record of protecting consumers, not companies that cheat people.”

Mr Smith was confirmed by the committee on Wednesday, with the agency’s three Republican commissioners voting for and the two Democratic commissioners voting against his nomination.

Rebecca Kelly Slaughter, a Democratic commissioner, said she voted against Smith because forcing him to withdraw from the Office of Consumer Protection’s most high-profile investigations “undermines public confidence in the commission’s ability to fulfill its mission ”.

But commission chairman Joseph J. Simons, a Republican, said he was “disappointed that two of my new colleagues have chosen to make Mr. Smith’s appointment an unnecessary source of controversy.”

Mr Smith, considered a hardworking and competent lawyer even by critics, worked as an attorney for the commission in the early 2000s, drafting many of its credit reporting and identity theft regulations. In private practice for much of the past decade, he has represented industry groups, including payday lenders. He has also appeared before Congress to advocate for a relaxation of regulations and a reduction in aggressive enforcement of existing laws.

Mr. Smith “stood up for the worst from the worst,” said Karl Frisch, executive director of Allied Progress, a Washington-based progressive advocacy group that opposed the nomination.

Mr Smith, in an interview on Wednesday, highlighted his previous work at the commission and said he would continue the mission at the Consumer Protection Bureau.

Credit…Covington and Burling

“I look forward to working with all the Commissioners to do what is best for consumers,” he said. “I obviously don’t think I’m disqualified because of past relationships with clients. I have a long history of serving consumers, industry and the profession.

As a lawyer at Covington & Burling, Mr. Smith has represented dozens of companies over the past two years, including numerous banks, lenders, credit bureaus and technology companies, which will require him to recuse themselves from any investigation or potential execution against these organizations, according to two people with knowledge of the situation.

But Mr Smith’s work for AMG has raised new questions about his ability to lead a division that controls payday lenders among many other industries accused of robbing consumers.

In early 2012, the Federal Trade Commission filed a lawsuit against AMG, arguing that the company – a complex network of companies overseen by Mr. Tucker – had engaged in an array of deceptive and fraudulent business practices, including illegal use of threats against borrowers unable to repay high interest loans.

Mr. Smith, then a lawyer with Morrison & Foerster, met with the agency’s attorneys and other defense attorneys on at least one occasion, a group that included Mr. Tucker’s personal attorney, Timothy Muir. Mr. Muir would later be charged and convicted of helping Mr. Tucker run what prosecutors described as a $ 3.5 billion criminal enterprise.

Mr Smith said his work was limited to advising his client, technically a company overseen by an Indian tribal council, on the commission law. He said the Morrison & Foerster team had been working on the case for about six months.

In October 2016, a Nevada federal judge hit AMG with a $ 1.3 billion settlement and held Mr. Tucker personally responsible for setting up the complicated business. In January, he was sentenced to more than 16 years in federal prison “for operating a national internet payday lending business that systematically circumvented state laws for more than 15 years in order to charge rates. illegal interest of up to 1,000% on loans ”, according to a press release from the Ministry of Justice. (Mr. Tucker had used his profits from the payday loan program to fund a side career as a race car driver.)

Mr. Muir, his lawyer, was sentenced to seven years in prison.

Mr Smith declined to say whether he had spoken with Mr Tucker, saying he was not sure a response would violate confidentiality agreements with his former clients. “And is it important? ” he said.

When asked if he had any doubts about representing companies that had helped Mr. Tucker extract millions of dollars from vulnerable people, he replied, “I think all lawyers think about it. I was part of a team at MoFo, and I think everyone deserves a good defense. He said the Native American businesses he represented believed they were helping people.

Mr. Smith also declined to name other companies on his recusal list. He said many of us were banks and therefore were generally not regulated by the Federal Trade Commission. He added that he would always stay busy at the agency as many companies were not on his list. “It’s a big world and the FTC has a very broad jurisdiction,” he said.

Mr Smith’s selection comes at a time of drastic deregulation of financial services – particularly the enforcement of laws designed to protect the poor – led by Mick Mulvaney, acting director of the Consumer Financial Protection Bureau. In recent weeks, Mulvaney has cut back on the bureau’s investigations into student loan abuse and payday lenders while calling for the elimination of an online database of bank complaints.

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