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Saturday, August 22, 2009

Obama almost gets it right

In June, President Obama released a plan to revamp the government's financial regulatory system. The primary feature of the plan is the creation of a new federal agency called the Consumer Financial Protection Agency ("CFPA") whose primary focus will be to enforce consumer protection laws.

Kudos to President Obama for recognizing the problem with the lack of enforcement of the consumer protection laws such as the FCRA. President Bush could have cared less the enforcement (or lack thereof) of the FCRA. So consumers are in much better hands now with President Obama in the White House.

But the key to increasing enforcement of the FCRA is not to switch enforcement agencies from the FTC to the CFPA. The key is to increase the penalties against violators of the FCRA, thereby making it more attractive for the nation's army of attorneys to sue the credit bureaus and furnishers who violate the FCRA. A large percentage of my practice as an attorney is comprised of representing consumers under the FCRA. It is so so so easy to find multiple violations of the FCRA in every case. The problem, though, is that it is very difficult to quantify the damage caused by these violations. IF the FCRA contained automatic damages of sufficient significance for violations of the FCRA, attorneys would flock to these cases and make the credit bureaus and furnishers toe the line or pay the fine.

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