FTC Chairman Jon Leibowitz is talking about going back into law.
Diego M. Radzinschi/The National Law Journal
With the re-election of President Barack Obama, lawyers are bracing for more vigorous enforcement activity and new policy initiatives at federal regulatory agencies.
Consumer protection and workplace rights are among the areas where historically it's made a clear difference who occupies the White House. As Obama begins his second term, lawyers expect the Consumer Financial Protection Bureau and the Federal Trade Commission to be even more aggressive, although open-ended questions remain about agency leadership. Likewise, at two agencies that oversee the workplace—the U.S. Equal Employment Opportunity Commission and the National Labor Relations Board—lawyers anticipate a renewed sense of purpose as well as new policy initiatives.
The new Consumer Financial Protection Bureau was almost certainly the agency with the most on the line during the election—Mitt Romney had vowed, if elected president, to repeal the Dodd-Frank Act that created the CFPB.
"It would only be natural for the CFPB to be more aggressive now that the election has virtually eliminated any remaining threat to the bureau's existence," said Hunton & Williams partner Ronald Rubin. Venable of counsel Jonathan Pompan agreed. "By all appearances, it's full steam ahead for the CFPB."
The CFPB's No. 2 official, Raj Date, announced last week he was leaving in January, but lawyers expect director Richard Cordray will remain at the helm at least until fall 2013, when some think he'll quit to run for governor of Ohio. Cordray's recess appointment—which was made when Republicans say the Senate was not technically in recess—expires at the end of 2013. On the CFPB's short-term agenda is a sweeping set of rules dealing with mortgages, which will be released in final form in January.
Financial services litigator Robert Maddox, a partner at Bradley Arant Boult Cummings, said the regulations are likely to trigger a wave of consolidation in the mortgage-servicing market.
"Smaller entities will have to make a decision whether they can stay in the space and comply with the regulations when the cost of servicing a loan becomes so great," he said. "If they can't create economies of scale, they'll get out of the business."
The agency also is creating a national mortgage database with the Federal Housing Finance Agency, which Maddox fears could become "an enforcement nightmare" if CFPB lawyers use its statistics as a basis for bringing cases.
Another controversial rule makes debt-collection lawyers among the entities subject to CFPB supervision. To Alan Kaplinsky, who heads Ballard Spahr's consumer financial-services practice, the CFPB has "put itself at risk" by including lawyers.
"The only thing that could really upset the apple cart is if the courts were to rule that Cordray's appointment was invalid," Kaplinsky said. He predicted that an individual debt-collection lawyer or trade group will sue over CFPB oversight.
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