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Op-Ed | BuzzFlash | May 22, 2018

Trump's Federal Trade Commission Pick Has a History of Advising Corporations He Will Now Regulate

Anti-MonopolyIndependent AgenciesRevolving Door

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Only in a world in which the head of the Environmental Protection Agency treats the environment like an enemy of his family does the latest news from the Federal Trade Commission (FTC) make any semblance of sense.

On May 16, Trump’s handpicked FTC Chairman Joseph Simons and his fellow Republican commissioners installed revolving door veteran Andrew Smith to a senior leadership position at the FTC. Smith, who has spent several years specializing in advising firms which harm consumers, will now run the FTC’s Bureau of Consumer Protection.

“Harm consumers” might sound like an exaggeration, but a glance at Andrew Smith’s client list reads like a “who’s who” of the worst consumer rip-offs of the past 18 months, including representing Facebook, Uber and Equifax.

It’s a wonder Wells Fargo seems to have never sought input from Smith.

The FTC’s “About the FTC” page identifies as its mission: “[w]orking to protect consumers.”

If Smith advised his private sector clients like Equifax to follow the law, his advice was either unclear or unpersuasive. And if he encouraged his clients to risk breaking the law because law enforcement on behalf of consumers tends to be feckless and penalties inadequate, well, that ought to disqualify him from a job in which “consumer protection” is literally part of his title.

Additionally, we now learn that Smith helped defend “AMG Services, the payday lender founded by the convicted racketeer Scott Tucker, whose predatory practices against impoverished borrowers eventually led to a $1.3 billion court-ordered settlement, the biggest in the commission’s history.”

As recognized by The New York Times, past work for AMG ratchets up concerns about whether Smith is well-suited to running “a division that polices payday lenders among many other industries accused of fleecing consumers.”

The very Bloomberg Law article that seems to have first broken the news of Simons’s imminent appointment highlighted the fact “that the FTC has a full agenda on its plate, including looking at issues with debt collection and data breaches at companies like Facebook and Uber.” As The New York Times later reported, Smith will be recused from those cases, as well as other agency top priorities, even as he is currently keeping the full scope of his recusals secret.

Recusal is preferable to wielding power in the face of a conflict of interest. But what would actually be better than recusal is installing senior leadership that isn’t part of the federal government’s corrupt revolving door culture. Career consumer advocates do not have conflicts of interest when it comes to consumer protection.

As FTC Commissioner Rebecca Kelly Slaughter pointed out in her dissent from Smith’s appointment, “Mr. Smith’s conflicts extend beyond Equifax and touch on other core portions of the Bureau’s mandate.” Worryingly, Slaughter informs us that there is FTC leadership has as of yet no meaningful plan for how the Bureau should proceed “on matters implicated by the full range of Mr. Smith’s conflicts.”

The broader impact of such concerns is reflected in Commissioner Rohit Chopra’s statement, in which he noted that it’s not just enforcement matters against specific Smith clients that raise concerns. Chopra observes that “Andrew Smith may not technically be prohibited from working on” non-enforcement matters, such as rulemakings and other broad policy matters.

Yet Smith, working on broad policy matters would, as Chopra notes, “raise the appearance of a conflict.”

All too often, as Chopra has argued previously, American ethics laws permit behavior which flies in the face of common sense intuitions about issues which can compromise the ability of government to serve the public.

It’s in that context that the truth behind Michael Kinsley’s adage that “the scandal isn’t what’s illegal, the scandal is what’s legal” comes to mind. While revolving between government and lucrative government-adjacent jobs might be common, it is not defensible. It is nearly impossible to help lead an agency ethically after having spent years undercutting that agency’s mission as a lawyer for some of the US’s worst corporate actors.

The FTC has chosen, by a 3-2 margin, to give a highly important job to a very compromised lawyer.

We as consumers can hope Andrew Smith secretly loathed the misbehavior of his clients, rather than encouraged it.

We as consumers can hope Andrew Smith will seek to end the anti-consumer behavior that made his clients so much money while causing so much pain.

But the FTC’s majority should not rely on hope to fulfill their mission of protecting consumers. Instead, the FTC should have appointed a leader of the Bureau of Consumer Protection with a proven commitment to consumer protection.

Jeff Hauser runs the Revolving Door Project, an effort to increase scrutiny on executive branch appointments and ensure that political appointees are focused on serving the public interest, rather than personal professional advancement.

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