Elizabeth Warren, assistant to the president and special adviser to the Secretary of the Treasury on the Consumer Financial Protection Bureau, used her appearance at the annual convention of the Society of American Business Editors and Writers to focus on accountability.
Her presentation touched on three main themes:
- Changes in the consumer financial marketplace. Over the years, credit products became much more complicated, she said. The trouble, she said, was a lack of regulation. “Consumer financial protection was not anyone’s No. 1 concern.”
- Scattered responsibility led to regulatory arbitrage. “Financial institutions could shop for regulators who would give them the most leeway,” she said. “… The result was that federal and state regulators also began competing for business, competing to create the most accommodating oversight. We had a system where big banks could choose their own regulators.” With the new consumer agency, the responsibility for regulation is centralized, she says. “Instead of hauling up seven regulators to point fingers at each other, now Congress can haul up one. That’s the ultimate accountability.”
- Make accountability public. We are setting out the agency’s goals in clear language, she said, and publishing her calendar on a public website every month, along with the bureau’s organizational chart and the data from their first consumer survey. “Once we are fully operational, we will do even more.”
In a followup question and answer session, she acknowledged that regulations can’t keep people from making bad financial decisions, but she argued that it is a crucial first step. “When financial products are so complicated … the the idea that we’re going to somehow educate consumers out of this is nuts. As we get the products cleaner, we can spend more time on education.”