Elizabeth Warren, Newly Appointed to the Consumer Financial Protection Bureau

7 years ago

If you read that your credit card has "two-cycle billing," would you know what that meant? Could you call your credit card issuer and contest the charge if you suspected it was unfairly applied? I'm decently educated, but I have to read these things three and four times to get the gist.

You shouldn't have to be a lawyer or an accountant to decipher your car loan, mortgage, or credit card agreement. That's why consumer advocates are cheered by Elizabeth Warren's elevation to the right hand of the president as someone tasked to make these daily consumer credit transactions easier for everyone to understand.

Two months after a sweeping financial regulatory reform bill passed the Senate on July 15, 2010, today President Obama appointed Elizabeth Warren head of the newly created Consumer Financial Protection Bureau (CFPB). She reports directly to President Obama and Secretary of the Treasury Geithner. Her old title was Chairperson of the Congressional Oversight Panel on the Troubled Assets Relief Program (TARP); her new title is Assistant to the President and Special Advisor to the Secretary of the Treasury on the Consumer Financial Protection Bureau.

Congressional Oversight Panel Chair Elizabeth Warren questions Assistant Treasury Secretary for Financial Stability Herbert Allison (not pictured) on the government's assistance to Citigroup during a hearing in Washington, in this March 4, 2010 file photo. This autumn, Warren, a contender to become the top U.S. consumer financial regulator, could become a focal point in a political debate over how far government should go to rein in the financial sector and other corporate interests. Photo taken March 4, 2010. REUTERS/Richard Clement/Files (UNITED STATES - Tags: POLITICS BUSINESS)

Two hours after the president's news conference, Warren hopped on the phone with some bloggers to answer questions. When asked if she had a wish to either become formal director of the CFPB for a five-year term (no) or perhaps return to her professorship at Harvard, she responded that her immediate priorities were to set direction, hire and fire employees of the agency, and do all things necessary to get American families back on a safer economic footing:

"This is about rebuilding American families."

The new bureau is expected to make agreements between consumers and the consumer financial products they buy -- credit cards, mortgages, or car or student loans, for example -- simpler and shorter. Expect easily understandable two-page credit card agreements instead of thirty-one pages of lawyerese studded with what Warren calls "tricks and traps" (teaser rates, negative amortization, hidden fees, cross-default clauses, penalty interest rates, and two-cycle billing, to name just a few). The bureau will also have jurisdiction over credit reporting, often used by potential employers during background checks, because, as Warren has said, "Part of [good] credit is credit reporting."

For people facing foreclosure or otherwise in trouble with mortgage payments, Warren expressed urgency in her desire to help.

Home ownership has been the number-one retirement plan for most Americans -- the idea being that you can pay off your home and live off social security. That's been destroyed by the crisis we're in. No one is happy about foreclosures whether they've happened already, are ongoing, or in a family's future.

There are two pieces of good news as a result of the new law: Congress gave the CFPB plenty of jurisdiction over home mortgages. There's never been a single agency before that has oversight of mortgage agreements no matter where they're issued. Second, the law has provisions for certain predatory practices that must stop now. We have to enforce the law that's already in place.

To that end, Warren will be meeting with Secretary of the Treasury Geithner early next week, and the two will be addressing the shortcomings of the Home Affordable Modification Program (HAMP) for people in danger of losing their homes. Warren has been a longstanding critic of HAMP's effectiveness and is eager to work from inside government to improve ways to help families stay in their homes.

When asked to clarify select priorities of the CFPB as it will operate as opposed to her 2007 key article outlining the proposed agency, Warren acknowledged that financial products like life insurance and annuities are also an important part of middle class security, household budgeting, and financial planning. Currently, the CFPB will have wide jurisdiction over financial products but not investment products, she said, nor should it.

Warren will instead work with SEC Chair Mary L. Shapiro to identify how financial investment products sold to consumers have the same issues with regard to credit cards and mortgage agreements in terms of tricks and traps. She called it a "shared agency approach." Warren and Shapiro (two out of the three new women "sheriffs" in town, according to Time magazine) will determine how more clear, effective disclosures can be offered given a wide and increasingly complex offering of financial products. "Believe me, when middle class families get two-page credit card agreements, this will have an impact on how insurance and other investments are marketed," Warren said.

When asked what she'll do if the CFPB starts veering from the original mission she's described since developing the idea in a 2006 email to then-Senator Obama, she said, "I'll have a strong ally in President Obama. And the CFPB is important to Secretary Geithner. We were told lobbyists were too powerful; they'd never let us have the Consumer Financial Protection Bureau. But here we are."

Indeed. And a good thing for consumers.

Warren will launch the Consumer Financial Protection Bureau so it's fully operational as of July 2011, despite mutters from Republican opponents unhappy about Warren's appointment.

Cynematic blogs at MOMocrats.com and P i l l o w b o o k.

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