Warren Defends New Consumer Bureau

The Obama administration official assembling the new federal agency overseeing credit cards, mortgages and other financial products is rebuffing banking industry claims that the agency is too powerful and lacks accountability.

Elizabeth Warren, who is putting together the Consumer Financial Protection Bureau, is also giving little ground against Republicans who say she's played an inappropriate role as federal agencies and states try pressuring big U.S. banks to overhaul how they modify mortgages and handle foreclosures.

The Harvard law professor and longtime consumer advocate was testifying Wednesday before members of the House Financial Services Committee. Top Republicans on the panel and their business allies have complained that the bureau - which opens its doors July 21 - has unfettered power to clamp down on financial instruments it considers unfair.

"Americans are looking for an honest marketplace," Warren said in her prepared testimony, adding, "Today, few of us seriously believe that we have the marketplace that American families deserve."

The bureau was created by the financial markets overhaul law enacted last summer by President Barack Obama and congressional Democrats.

Republicans say the law gives the agency too much power because its money comes from the self-financed Federal Reserve without any congressional controls; because by law it can regulate products it considers "unfair, deceptive or abusive," terms they consider too vague; and because it is headed by a single, presidentially appointed director, and not a bipartisan, multi-member commission like some other agencies.

Financial Services Chairman Spencer Bachus, R-Ala., earlier this month called the bureau "perhaps the single most powerful agency ever created by an act of Congress."

Bachus was preparing to introduce a bill with Rep. Shelley Moore Capito, R-W.Va., that would replace the director with a five-person commission with members from both political parties, according to a document obtained by The Associated Press.

Hoping to restrict its power, the House voted earlier this year to limit the bureau's budget to $80 million this year, well below the $143 million Obama wants. The Democratic-run Senate and Obama are unlikely to accept that reduction.

In her statement, Warren said oversight is "deeply important" and said the bureau is answerable to lawmakers and the courts.

"As is true with respect to all other federal agencies, Congress has the last word on CFPB rulemaking," she said, using the bureau's acronym. "If Congress is unhappy with a rule, it can overturn it."

She also said creation of the bureau increased accountability because the law gave it powers that previously were spread among seven agencies.

"The tangle of seven agencies failed to create effective rules and left gaping holes in oversight," she said.

Obama is not expected to nominate Warren as director because she seems too controversial to be approved by the Senate. He could appoint her to the job during a congressional recess - which would not require Senate approval but would give her the job only through 2012.

Warren, who championed the agency before it was created, has also run afoul of Republicans following reports that she has been advising federal agencies and state attorneys general pursuing big banks. Earlier this month, the government officials gave five large banks a list of demands that would curb their ability to start certain foreclosures and make it easier for struggling homeowners to modify their mortgages.

In a written statement Tuesday, Warren said the bureau was invited to provide advice.

"We're happy to help where we can, particularly in light of our responsibilities to protect consumers in the mortgage servicing marketplace in the future. We are always ready to be a voice on behalf of American families."

The bureau is chiefly designed to give consumers simplified information about financial products and protect them from unfair practices. Priorities Warren considers important include regulating mortgages, credit cards and non-bank financial companies like mortgage brokers, payday lenders and private providers of student loans.

As part of an effort to assuage critics, Warren said she has met with over 60 members of Congress and dozens of executives of financial institutions, large and small, across the country.

She also said the bureau will move next year to a new headquarters across the street from the White House. In her prepared statement, she said, "We want the CFPB to have a very tangible presence for anyone who visits Washington."

Increase your money and finance knowledge from home

How much house can I afford

Home buying 101, evaluating one of your most important financial decisions.

View Course »

Bonds for Beginners

Learn about fixed income investments.

View Course »

Add a Comment

*0 / 3000 Character Maximum


Filter by:

We do not need another federal agency wasting money. Defund them.

March 17 2011 at 2:37 AM Report abuse +1 rate up rate down Reply

ultimately this is all just a pol game. the problem is not about whether we cut 30 or 70 bil in discretionary spending. it is about the the other 1.3 to 1.4 trillion in non discretionary spending and that ignores the "offbudget afgan and irag spending of $160 bil). these guys play the diversionary game, both sides, about stuff the matters little in the grand scheme. for individuals, it would be like saying, no we are not going to order that pizza for $12, hold on, i have a coupon for a large 3 cheese, 4 topping pizza for 8.99. it is hard to fix a large 3 cheese, 4 topping pizza at home for 8.99. work on the right stuff and in 3-5 years, we may come out of this.

March 16 2011 at 7:09 PM Report abuse rate up rate down Reply

at this point, it isn't the financials offering very little to the most creditworthy, it is the fools from 3 to 4 years ago. how to do you dictate to business where their call centers are? do we tell bmw they can't produce and assemble the X models in spartanburg, sc? how do we tell ford they can't produce and assemble the f350 in Mexico. which one is a foreign car and which is a domestic? it would be great if it was as simple as everyone tries to make it.

March 16 2011 at 6:57 PM Report abuse rate up rate down Reply

The Wall Street Banksers fund, own, and operate the GOP

March 16 2011 at 6:28 PM Report abuse rate up rate down Reply
Hello Mark

About time. 1st order of business should be penalty for any company with call
centers outside U.S. They should also have to disclose their call center locations
(name of state anyway), their hours of operation, # of agents and % of total reps
that are in U.S.

March 16 2011 at 3:28 PM Report abuse +2 rate up rate down Reply
Jim Jardine

If she wants a " tangible " presence in Washington, she can set-up tent.

March 16 2011 at 3:25 PM Report abuse +1 rate up rate down Reply


March 16 2011 at 1:02 PM Report abuse -3 rate up rate down Reply
3 replies to gw50th's comment

Try to find out how many employees are being employed for the $80 million. Reports say up to 1200 by 2012.......I cant find out how many it currently has for the $80 million but if you work a little math you may start to wonder (or get the idea) that someone is being paid really well to do this job.......ANOTHER EXPENSE ON THE TAXPAYER THAT WILL PROVE TO BE ANOTHER OBAMA WASTE OF MONEY

March 16 2011 at 12:48 PM Report abuse +1 rate up rate down Reply

Tim goes on to point out some other top Obama officials cashing out to work for big banks:

Deputy White House Chief of Staff Mona Sutphen, now a lobbyist for UBS.

White House Counsel Greg Craig, who went to Goldman Sachs

Budget Director Peter Orszag, who went to Citigroup

Labor Department aide Oscar Ramirez who represents Bank of America at the Podesta Group

Top Treasury Department aide Damon Munchus, who now lobbies for Citigroup and the International Swaps & Derivatives Association, among others.
This is a far cry from what some of us expected when candidate Obama pledged he was "closing the revolving door."

Feast your eyes, the banking industry is pulling the strings at the Obama puppet white house. We won't get a fair shake from any bankster goon or Wall Street crook until this is brought to light and ask for change. NO MORE BANKSTERS IN THE WHITE HOUSE

March 16 2011 at 12:36 PM Report abuse +1 rate up rate down Reply

The 2002 banking legislation that Senator Shelby (R) allowed bankers to write and speak at hearings but wouldn't allow consumer advocates to speak is what lead to our downfall. This legislation eliminated truth in lending laws, legalized predatory lending and credit card loan sharking. Warren is the person that exposed this legislation for what it was and the gop has it against her. And the gop is fighting very hard to repeal the new banking legislation so we can go back to the 2002 legislation. You know, because they weren't making enough off mortgages, they had to charge additional thousands in closing costs. And yet there are those who support the gop - go figure.

March 16 2011 at 11:46 AM Report abuse +2 rate up rate down Reply
1 reply to inasctg56's comment

The legislation your refereing to making predatory lending legal was a Bill Clinton and democratic move. Harry, Barney, and Nancy were told Fannie and Freddie were in trouble 9because of predatory lending) and defended them saying nothing is wrong.....let the money flow. The TIL laws were anything except truthfull....When Cuomo (a democrat) stuck up the appraisers a ** with the HVCC he did nothing about TIL. He allowed Appraisal Management Companies to raise the cost of appraisls to the consumer and to take 20% - 40% of the appraisers customary fee and allowed it to be shown on disclosure forms as all being an appraisal fee (which was a lie). They now require that a lender breaks out exactly what was the actual amount paid to an appraiser and exactly how much goes into an AMC's pocket (the democrats fought this requirement last summer). Thanks to democratic reform of lending we now have unqualified / unsupervised appraiser trainess appraising (many are over valueing property because they dont know what they are doing).....so get ready for the second round of mortgage defaults when people lose their job and find out they are upside down on the house. By the way, Andrew Cuomo, who blackmailed Fannie and Freddie into the HVCC agreement and the requirement to use a 3rd party vendor management company, sat on the board of the nations 3rd largest AMC, and still has heavy ties in the industry. Typical democratic under-handed, self serving, put money in their pocket governance.

March 16 2011 at 12:24 PM Report abuse +3 rate up rate down Reply