Personal Finance

Wall Street’s Public Enemy #1 Fires Back at Critics

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Elizabeth Warren took time away from her job overseeing the creation of the new Consumer Financial Protection Bureau last week to confront her critics, continuing her criticism of big banks’ policies and warning that a major victory for consumers remains under attack.

“David beat Goliath, but make no mistake: Goliath is not down for the count,” Warren said to members of Consumers Union, the nonprofit group that publishes Consumer Reports. Read the full speech here. “Families can and should be proud of their new watchdog, but they would be wrong if they take its future security and independence for granted.”

That watchdog is the CFPB, which Warren championed as a law professor at Harvard and later as the overseer of the TARP bailout program. The bureau was given broad power and independence in the Dodd-Frank Reform Act.

[Related article: The GOP’s Plans for Financial Reform]

Banking leaders and Republican members of Congress successfully blocked Warren from becoming director of the new agency; instead President Obama named her as his special advisor in charge of getting the bureau off the ground. Now Republican leaders have called for amendments that would reduce the bureau’s independence and subject its budget to Congressional review, and cut its budget by 40%.

“Since this new government bureau has virtually unlimited powers over a huge part of our economy, accountability demands that Congress exercise appropriate oversight,” Spencer Bachus (R – Ala), chairman of the House Financial Services Committee, told Bloomberg News.

Warren used her speech to fight back.

“Politicizing the funding of bank supervision would be a dangerous precedent,” she said. “While the banking regulators charged with preserving the safety and soundness of financial institutions and ensuring consumer protection compliance by smaller banks would continue to receive independent funding, the agency in the financial regulatory system with lead responsibility for protecting consumers would face a different set of rules – rules that threaten its independence.”

[Related article: Holly Petraeus, Military Family Watchdog Slated for Consumer Protection Agency Post]

Warren plans to hold hearings in the coming week on the impact of the CARD Act. According to a study released Wednesday by the Center for Responsible Lending, which we covered here, the law has closed the gap between what credit card users thought they’d be charged and what they were actually charged by more than $12 billion a year.

Image: White House

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  • http://www.amazon.com/Credit-Card-Usury-Christian-Failure/dp/145375329X/ref=sr_1_2?ie=UTF8&qid=1298299461&sr=8-2 Paul Jesep

    I’m delighted that EW is fighting back. In many ways her crusade is not only on behalf of consumers, but it stands to help the economy in the long term if it empowers families and individuals with smarter decisions. Less interest paid on consumer debt means more spending power that will help the economy.

    Paul Jesep
    author,
    “Credit Card Usury and the Christian Failure to Stop It – A Call to Social Justice Against the Money Changers”

    http://www.amazon.com/Credit-Card-Usury-Christian-Failure/dp/145375329X/ref=sr_1_2?ie=UTF8&qid=1298299461&sr=8-2

  • Christopher Maag

    Thanks for writing, Paul. Yes, many sources also tell me how Warren’s proposed actions will help the large banks and investment firms too, by decreasing individual traders’ and executives’ incentives to wager the company on bets that primarily serve to boost their own bonuses.

  • Lauren

    But again, you fail to acknowledge that leading up to the CARD enactment, banks significantly increased interest rates, lowered credit limits and canceled credit cards for millions of people. So it really depends on what how you define successful. Glad there is more transparency, but the majority of Americans are still paying higher interest rates and lower credit limits, then they were 12 months BEFORE the CARD enactment.

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