Giant companies facing federal scrutiny for exposing sensitive consumer data have good reason to unclench their stress balls: Their own lawyer was just put in charge of the office that is investigating them.
Andrew Smith will head the Federal Trade Commission’s consumer protection office after a party-line vote – typical on policy matters, but rare on staffing questions – confirmed his appointment Wednesday.
Smith will have to recuse himself from numerous ongoing investigations that his office would normally lead, including the commission’s high-profile scrapes of data breaches at Equifax and Facebook, because of his past work on behalf of the firms.
But the full list of his conflicts of interest is likely much, much longer. Smith has built his career on representing large firms and industries who hoped to soften regulations that he will now be charged with enforcing. FTC officials did not respond to a request for copies of Smith’s ethics paperwork that might reveal the whole picture.
President Donald Trump’s administration has already undermined consumer protection and financial industry oversight work in a variety of other ways, putting a muzzle on the Consumer Financial Protection Bureau and repealing numerous curbs on abusive business practices.
Democratic commissioners Rohit Chopra and Rebecca Kelly Slaughter issued statements opposing Smith’s appointment in unusually pointed terms after Chairman Joseph Simons pushed Smith through without even holding a meeting to discuss their concerns.
The many recusals that Smith’s past work will force at FTC’s consumer watchdog office mean “[w]e will not be able to fully utilize Andrew’s significant experience, talents, and qualifications,” Chopra wrote.
“I am concerned that selecting a director for the Bureau of Consumer Protection who is barred from leading on data privacy and security matters that affect so many consumers, command so much public attention, and implicate such key areas of the law potentially undermines the public’s confidence in the Commission’s ability to fulfill its mission,” Slaughter wrote.
The most notorious of Smith’s former clients is Scott Tucker, the payday lending mogul who used the internet to circumvent state usery laws for years. Tucker, who was sentenced to 16 years in prison earlier this year after Obama-era officials brought a Racketeering Influenced Corrupt Organizations (RICO) case against him, famously used his ill-gotten gains to finance his dream of becoming a professional race car driver.
The ostentatious nature of his criminality and the frivolous nature of his lifestyle helped make Tucker a powerful symbol of systemic inequities in the U.S. economy. Now, Tucker’s lawyer is going to be in charge of protecting consumers from men like him. But while Tucker is a flashy character, the broader picture of Smith’s professional experience and potential conflicts of interest is perhaps even more unsettling for the FTC’s ability to police corporate wrongdoing.
Smith did the bulk of his private-sector lawyering at Covington & Burling, a massive “white-shoe” firm specializing in corporate defense work and regulatory compliance. He is only the most recent in a line of prominent Covington & Burling lawyers to move back and forth between serving the people and the more lucrative practice of defending powerful people accused of wrongdoing. Firm alums of all political stripes have slipped back and forth across the public/private divide, from the right-wing warmonger John Bolton and Bush-appointed Comptroller of the Currency John Dugan to Obama-era Justice Department officials like Lanny Breuer and Eric Holder.
The latter two men oversaw the Obama administration’s lax accountability work on the mortgage and foreclosure crises, then returned to C&B after leaving government work. Their ties to the firm drew foreclosure fraud protesters to Covington’s corporate headquarters at the height of Holder and Breuer’s neglect of Wall Street casework in 2013, leading to a sit-in and several arrests of elderly women who’d lost their homes to bank swindles.
Covington’s attorneys carry a wider portfolio than just the white-shoe work that draws occasional notoriety. A team of lawyers and support staff from the firm represented one of the first six protesters acquitted of multiple felony charges for decrying President Donald Trump on Inauguration Day last year, for example. The firm did not respond to requests for comment.
But Smith’s work at the firm has focused on protecting big businesses from regulation, oversight, and investigation. He was co-chair of the firm’s Financial Institutions Practice Group and regularly advocated for looser rules and more trusting government treatment of financial companies.
At a Senate hearing last October over the Equifax scandal, Smith suggested that the credit bureaus face too much scrutiny, not too little. The Consumer Financial Protection Bureau’s new authority means Equifax and its peers “have been subject to essentially continuous examination cycles” that force them to “expend substantial resources responding to examiner requests.”
The insinuation that existing rules were sufficient or even overbearing didn’t sit well with the panel, which had called Smith to speak on behalf of his big business clients. Sen. John Kennedy (R-LA) told him the public needs to hear “specific things that you and your clients are going to do to improve the situation, not platitudes, not bromides, specific suggestions.”
Now, Smith will be in an even odder position than he was at last fall’s hearing. Instead of telling lawmakers to back off his clients because they’re trying their best and they’re super-duper sorry that they revealed sensitive information about nearly every adult American, he’ll be running the office that’s supposed to investigate how exactly those clients screwed up – and deciding what ought to be done about it.t