Reed Smith Vladeck's First Public Address Includes Priorities and Staff Changes

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Posted at 12:21 PM on June 19, 2009 by John P. Feldman
Vladeck's First Public Address Includes Priorities and Staff Changes

On June 18, 2009, 77 hours into his tenure as Bureau Chief for Consumer Protection, David Vladeck gave his first public address at the ABA Consumer Protection Conference, held at Georgetown University Law Center. He described himself as being "not part of the fraternity" of the FTC. He said that Commission Chairman Jon Leibowitz reached out to him and expressed a desire for "fresh eyes." In his address, Vladeck suggested a set of agenda items that may be a hint of what his enforcement priorities will be.

* Economic fraud will be a top priority – mortgage fraud, debt collection/debt consolidation, and other financial services scams.
* Privacy – He stated that it is time to "take another look at privacy regulation." Vladeck said that the FTC has taken a "notice and consent" approach, and then moved to a "harm" approach. He said that these two approaches do not seem to address the issue comprehensively. He did not give much detail, but it is clear that there will be new ideas and approaches, reexamining assumptions about harm that is "unquantifiable."
* Advertising, including behavioral marketing – Vladeck stressed a focus on how advertising affects those who are particularly vulnerable, including children. He also mentioned advertising of alcohol to teens. He made approving reference to the "disparate impact theory" that has been used in connection with some recent enforcement matters that have dealt with advertising targeted at Hispanic markets.
* Legislative action – Vladeck said he expected that the Commission will be focused on its reauthorization, and with regard to President Obama's proposal concerning a new consumer protection body that will deal with financial products, Vladeck stressed that the FTC should be on "equal footing." Also, Vladeck stated that the FTC should have civil penalty authority as well as independent civil litigation authority. Thus, these may be additional agenda items.

In addition to these agenda items, on which he said he would keep "an aggressive pace," Vladeck announced some key personnel moves.

First, he announced that Chuck Harwood, Northwest Regional Director in Seattle, will be his Deputy Bureau Head. Harwood has been the regional director for 20 years. Prior to that he was a staff counsel to the U.S. Senate Committee on Commerce, Science, and Transportation. According to our partner Anthony DiResta, formerly Harwood's counterpart in the Southeast Region, Harwood is an excellent choice, tough and fair.

Second, Peggy Twohig, Assistant Director for Financial Practices, will be leaving the Commission for a post at the U.S. Treasury Department. This appears to be a loss for the Commission and a huge pick-up for Treasury. Twohig has been a leading force against predatory lending practices, and it seemed from Vladeck's announcement that he was genuinely disappointed that he was losing her and her experience, especially in light of his top agenda concern.

Third, replacing Twohig will be long-time FTC lawyer Joel Winston, who currently is Associate Director for Privacy and Identity Protection. Extremely well regarded, Winston received the 2008 Presidential Rank Award of Meritorious Executive last fall, and was widely rumored to be under consideration for the Bureau Chief position.

Fourth, Jessica Rich, Assistant Director for Privacy and Identity Protection, will assume the role as Acting Associate Director.

Why This Matters: The Bureau Chief for Consumer Protection at the FTC sets policy and tone for the consumer protection side of the Commission. The Vladeck era has begun, and we can see that he will bring a fresh perspective. He has never served at the FTC. He has sued the FTC ("successfully," he added). His agenda seems to have two central substantive interests: financial fraud and privacy. Although this was somewhat expected given his background, one gets the sense that he is going to pursue mortgage fraud and other types of financial services fraud very aggressively, and will be particularly interested in any sort of practice that targets those who have been disparately impacted by the economic downturn. The changes in the personnel in both the financial and privacy divisions are interesting in light of the importance both of these divisions are likely to have for the foreseeable future. Finally, by all accounts, the selection of Harwood is a positive move that may have the side benefit of giving Vladeck insight into the activities and utility of the regional offices.