Personal Finance

Consumers, a New Watchdog has Arrived

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Within hours of going to work at the White House, Elizabeth Warren put Wall Street on notice.

“The time for hiding tricks and traps in the fine print is over,” she wrote in a blog post. “People ought to be able to read their credit card and mortgage contracts and know the deal. They shouldn’t learn about an unfair rule or practice only when it bites them.”

Last week President Obama named Warren as his special adviser in charge of the Consumer Financial Protection Bureau, a new federal agency inside the Federal Reserve with power to mandate better disclosure and more consumer-friendly products from banks, credit card companies and payday lenders.

The fact that Warren was named special assistant, instead of director of the bureau, points to the controversy that surrounds her. In no less a public forum than the Wall Street Journal editorial page, she has accused big banks of selling “deceptive mortgages for more than a decade” and perpetuating a “massive looting from middle-class families.”

Such frank talk made Warren a darling of liberals and consumer advocates. But it enraged Republicans and bank leaders. It also repelled powerful Democrats including Chris Dodd, chairman of the Senate Banking Committee. Fearing a prolonged fight over her nomination to become director, the Obama administration opted instead to name her to an advisory role that does not require Senate confirmation.

In her first public appearance as special advisor, Warren announced the bureau would create a standard, simplified mortgage disclosure form, which federal regulators have for years tried – and failed – to accomplish.

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