The Consumer Financial Protection Bureau (CFPB), created as part of the Dodd-Frank financial regulatory reform following the Great Recession, is under attack by the Republicans.
And Senator Elizabeth Warren, who was behind its creation, said she will not compromise on its current structure and leadership.
“[Republicans are] asking for it to be a less effective agency,” Warren said. “Commission sounds so bland. Take a look at the other commissions: The Security & Exchange Commission, The Federal Election Commission… They want something that can get snarled up so it can’t move. And so when some big bank figures out some new product and starts cheating people, they want an apparatus so that it will take years, maybe decades, to respond.”
In an effort led by Representative Jeb Hensarling (R-TX), the Republicans have proposed a plan to weaken the leadership of the agency and shrink its enforcement tools, including replacing its current director Richard Cordray with a commission.
Warren said she will not compromise on that point. She also added that contrary to popular belief, the consumer agency does not conflict with being pro-markets.
“The consumer agency is very much about markets,” she said. “We want to see lots of credit card offers, lots of mortgage offers, lots of different kinds of checking accounts, lots of innovation.”
Warren added, though, that this must all be done on a level playing field, where business don’t use trickery and fine print to take advantage of customers. She pointed to Wells Fargo’s recent fake account scandal as an example of what can go wrong without strong oversight.
“You’ve got to make your profits in an open and transparent way,” she said. “When that happens, consumers win.”
The CFPB was created to make sure that financial products and services work better for the people who use them. These products include loans, credit cards, and mortgages.
“The point is it works,” Warren said. “And that is precisely why the big banks hate and the Republicans hate it.”
“It has already forced the largest financial institutions in this country to return more than $12 billion directly to people they cheated and caused a lot of other financial institutions to say ‘maybe I’ll just decide not to cheat them in the first place.,” she said, noting that the CFPB’s hotline has handled more than 1 million complaints.
Warren added she was willing to compromise in certain areas. For example, she would be open to reducing student loan debt interest rates to 4% — when she would prefer 1% — versus the current 8% level.
But when it comes to the power of the agency, she won’t budge.
“The consumer agency is the constant reminder that government can actually work for the people,” she said. “Not for the giants. Not for the big guys. But for the people.”
Nicole Sinclair is markets correspondent at Yahoo Finance.
Please also see:
Warren: Senators are spending 110% of their time working through what Trump has done
Senator Warren says the total tax revenue from corporations is too low and needs to be higher
Elizabeth Warren finds it ironic that Jamie Dimon and Lloyd Blankfein complain about regulation
Senator Warren: Republicans have locked us out of healthcare reform talks