Why Elizabeth Warren Should Head the New Consumer Protection Bureau

Harvard law professor Elizabeth Warren dreamed up the idea of a Consumer Financial Protection Bureau, which Congress authorized as part of Wall Street reform. She campaigned for it tirelessly and understands the issues better than anyone else. She’s the most qualified person, by far, to become its first director – the one that will set its course.

Naturally, the banks oppose her. Having failed to strangle consumer protection in its cradle, they’re now out to stunt its growth. They want a director they can co-opt right from the start. So it’s time for another cavalry call. Consumers have to stand up and scream for their champion all over again.

No one can co-opt Elizabeth Warren. She’s fearless in defending families and merciless on financial abuse. She understands fine print and how it’s used to con customers. She believes, passionately, that banks and other lenders ought to come clean.

That’s why she’s so unpopular, especially on the Republican side of the aisle. She could win a majority in the Senate, but the Senate is no democracy. A minority – 40 percent – can stop her nomination from reaching the floor. On television last week, Sen. Chris Dodd, chair of the Senate Banking Committee, floated the possibility that the minority might win. The banks and their anti-consumer defenders could keep her from being confirmed.

The last thing they want is a strong director truly committed to righting wrongs. And Warren is strong. She has accused the big banks of “throwing away customer trust like so much worthless trash.” She was shocked by the depth of deception in the mortgage market, and the sale of credit cards full of – her favorite phrase – “trick and traps.” She has written that craven federal regulators “played the role of lookout at a bank robbery, holding back anyone who tried to stop the massive looting from middle-class families.”

Oooo, the banks say, that hurts. She’s biased, incendiary, and unfit for the role of consumer protector. I say, it’s about time that somebody lit some fires. Warren gets it exactly right. Deregulation set off a race to the bottom, where deceptive and unfair practices ramped up bank profits at the expense of American families. Bankers didn’t care about the collateral damage and they haven’t learned a thing. Predators are born to prey. The preyed upon need the very best defense they can get.

Warren’s first interests are simplicity and transparency. Complex products are good only for the financial industry, which uses them to extract ever-higher fees. Warren dreams of a two-page mortgage document, because the lending terms are that simple to explain.

Most important, she knows her way round the financial industry. She has specialized in understanding family finances and debt. She can spot the five little words that create an opening for abuse. That’s why the banks are out to stop her. The last thing they want is someone who knows what they’re doing.

They even paint Warren – of all people – as anti-consumer. If she runs the financial protection bureau, they say, she will take your sainted “consumer choice” away. In fact, she hopes to force enough simple disclosure that, for the first time in years, you can truly compare financial products, discover the bad or expensive ones, and make better choices for yourselves. (Although I must add that it’s okay with me if she takes your “choice” of a deceptive mortgage away.)

The word is that Treasury Secretary Timothy Geithner opposes Warren too. She chairs the committee that’s trying to find out how TARP, the $700 billion bank bailout fund, spent its money during the spectacular collapse of 2007. She has publicly taxed Geithner with keeping mum, and keeps demanding an accounting of where the taxpayers’ money went. No wonder the banks are running scared.

The slender blonde professor is just too tough. If she’s nominated, and bank-owned Senators try to tangle with her publicly, she’ll wipe the floor with them. That’s why they’re hoping to throw a blanket over her head right now.

Obama should nominate her and let her show her stuff. In Senate hearings, her clarity, faith in honest dealings, and trust in the value of a clean financial system will come shining through. Families need a fighting chance against the white-collar cons. Elizabeth Warren can deliver.

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Ray in MD // 07/21/2010 at 7:52 am

Thank you, Mrs. Quinn for all of your articles but especially this one.

Supporters of Ms. Warren can sign a petition at:

S. Brown // 07/21/2010 at 9:44 am

I have listened to Ms. Warren many times on TV and she is the ONLY one so far that can, in my opinion, explain the complicated mess that we are in. I truly hope she will be nominated and confirmed. I challenge Mr. Obama to have the courage to put her in charge.

Bruce Chaffee // 07/25/2010 at 12:36 pm

This is a good and logical step towards recovery and an economy where citizens can have a modicum of trust in the system.

Dan Smith // 07/25/2010 at 1:47 pm

The laissez-faire, caveat emptor, free-market ideologues have had it all their way for the last few decades. Thing have swung way off balance. We need to get back to some reasonable equilibrium, with meaningful regulation–the right amount–not too much, but not too little, either.

Nessa // 08/03/2010 at 4:55 pm

The banking industry has consistently advocated simpler disclosures. As far back as May 21, 1986, ABA testified in favor of improved credit card application disclosures, but emphasized the need for Congress to keep the disclosure, “meaningful, understandable, and useful. . . The simpler the disclosures, the more likely it will be useful to the consumer.” Numerous other letters to the Federal Reserve Board strongly encouraged consumer testing in creating brief, easy-to-understand credit card disclosures. In testimony on September, 15, 1993, in an effort to reduce the paperwork burden, ABA unsuccessfully advocated for simplifying mortgage documents. Indeed, it is interesting that the current administration recently increased the required 3-page mortgage summary disclosures to 4 pages.

Jane // 08/11/2010 at 3:17 pm

One way to get simple disclosure is to simplify the product. I’m all for simplifying banking products. Another way to get simple disclosure is not to kid people about what things cost. The new mortgage disclosure from HUD was in response to deceptive tactics by mortgage brokers and bank loan officers, that led people into paying higher mortgage rates than necessary.

Chris Chilton // 08/04/2010 at 7:17 pm

It’s time for the Obama administration and the Democrats in Congress to grow some backbone. Elizabeth Warren is the best person for the job and everybody knows it.

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