Price Fixing? Why is the FTC Involved at All?
FTC "Price Fixing" Allegations Hearing Update
On Thursday, Feb 22, 2018 there were oral arguments presented in the Federal Trade Commission building at 2 pm. The meeting adjourned just before 3:30 pm.
There were 55 to 65 people in attendance, which we were told is an extraordinarily larger crowd than typical. This is a very unique case.
On the FTC side there were two lawyers – one male, one female. On the Louisiana side there were four males at the head counsel table and three or four other attorneys.
I have never attended one of these hearings, so I really did not know what to expect. It turned out to be rather mundane. I really don’t wish for this to turn out to be a “he said, she said” type of thing, but in this instance it’s impossible not to do but just that.
The presenting attorney for LREAB was male. The FTC’s presenting attorney was female, as were both administrative law judges (ALJ).
Each side was given 30 minutes to present arguments with Louisiana given 5 minutes at the end for rebuttal.
All that we have read and heard as appraisers was presented by Louisiana. Louisiana (the defendant) argued they were acting in good faith to follow and initiate Dodd-Frank as well as the Federal Final Rule.
One vitally important point was made, as well – that was that any further demands by the FTC are unwarranted. Further, the make-up of the LREAB was not a majority of residential appraisers. Therefore, it is not a board of “market participants”.
One administrative law judge then brought up the NC dental case. She then asked why can’t fees be above customary and reasonable fees. He said they can be for complex assignments. He then mentioned the familiar term “a rush to the bottom” for fees as well as experience, and Dodd Frank recognized that fact.
Right at the start she said this case is about "price fixing"…Then it was the FTC’s (the plaintiff) turn. Right at the start she said this case is about "price fixing". She argued Louisiana still has not put adequate changes in place.
This lawyer answered some of her own questions, and one answer really caught my attention – “looking at public comments is inadequate”. Think about that answer as an American living in a democracy. It was further stated that future active supervision by Louisiana appears inadequate. (Can Louisiana be trusted to run its own state?)
In the argument for the motion for dismissal, the FTC stated that future adequate oversight seem “unlikely”. She stated the board was made up of eight appraisers. She corrected herself and stated one was and had to be an AMC member/representative. She failed to mention the board voted 8 – 0 in favor of C & R fees. An administrative law judge asked who the actual market participants were. The ALJ’s answer was, “Do the regulants have a personal interest?”
Louisiana’s rebuttal pointed out two glaring inaccuracies:
- Are all government levels in Louisiana to be distrusted?
- The case is about price fixing.
This is not true. All statements made in Louisiana came straight out of Dodd Frank and the Federal Final Rules.
The LREAB attorney stated both AMC’s that were disciplined in Louisiana came forward and admitted to low fees and agreed to cease such activities going forward. iMortgage could not show support for the fees it paid during their investigation.
Then he closed his brief, took off his glasses, and leaned forward on the podium to speak face to face and heart to heart with the ALJ’s.
He stated that in 2006 Louisiana had to survive a disastrous hurricane. Then on the heels of that there was the mortgage meltdown of 2007 – 2008 in Louisiana and across the United States.
Then he gave the stomach punch. Dodd Frank was in direct response to dishonest appraisals caused by a race to the bottom for the cheapest fees paid to appraisers.
The ALJ’s took all under advisement.
It is interesting to consider some related facts and actions here.
The two AMC’s that were disciplined had accepted their outcomes. Then why is the FTC involved at all? Could it be another entity or entities have some concern regarding future actions, not only in Louisiana, but elsewhere, as well?
Consider this – Louisiana will have the opportunity to recover its legal fees if it can show there was no just cause for this case. Don’t forget, the original response from Louisiana was, “There is no case”.
There appears to be no real “there” there, in my opinion.
In closing, it is important to report that VaCAP had four members at the hearing. John Russell of the ASA attended with us. Also, Brian Rodgers of the Appraisal Institute was in attendance.
This is my personal observation of the proceedings that took place at the FTC hearing.
Certified Residential Appraiser