Warren calls for accountability in consumer agency
Elizabeth Warren, a Harvard law professor and the engineer behind the new Consumer Financial Protection Bureau (CFPB), laid out her blueprint for making the new consumer agency accountable to consumers during a speech on Friday.
Prior to the financial crisis that began in 2008, oversight for consumers was scattered among seven tangled government agencies “with gaping holes in oversight,” Warren told attendees at the Society of American Business Editors and Writers 48th Annual Conference at Southern Methodist University in Dallas. “A single regulator with a clear mission is more accountable,” she said.
Warren used the words “account” “accountable” and “accountability” at least 20 times in her prepared remarks and during the question and answer session with reporters. “Accountability means someone can be held responsible to failure,” she said.
The role of the agency is to police mortgages and credit cards and try to curb predatory lending and abusive card accounts. While the consumer agency will fix some basic structural problems in those areas, the CFPB cannot block other government agencies from doing their jobs.
“While we cannot interfere with other agencies’ rulemaking efforts, no matter how much we think consumers will be harmed by their rules, other agencies can veto our rules,” said Warren. “This is an extraordinary restraint, another assurance that we can be held to account for our actions.”
Politics got in the way of launching the CFPB, which is a “well thought out” agency, Warren said. She said she fears the debate around the CFPB’s funding will prolong the problem. “Politicizing the funding of a banking agency can undercut its effectiveness,” Warren said. “Political independence is critical for a bank supervisor to be strong enough to be truly accountable to the American people.”
To increase accountability, Warren said it is crucial to set goals for the CFPB and make them known to the public. “We don’t need one more agency that kinda, half-pretends to do something but doesn’t do anything,” she said.
The CFPB has launched a website, five months before the agency is officially “live.” In addition, Warren noted that she publishes her calendar on the website every month along with the bureau’s organizational chart and the data from the first consumer survey it conducted. “Once we are fully operational, we will do even more,” she said. “With your help, this agency has the opportunity to make accountability its hallmark.” More than half the money we spend will be on enforcement.
The agency is also focused on helping consumers understand complex financial information. A first step of the agency is to simplify two key documents used in real estate transactions. “Financial documents might as well have a sheet of concrete on top,” Warren said. “They say, ‘Don’t read me.’ ”
Because the agency is independently funded through the Federal Reserve system, it will not be furloughed in a government shutdown.