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.
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."