Sunday, October 31, 2010

Presidential Assistant Warren Pledges Transparency and Tough Enforcement for new Bureau of Consumer Financial Protection

Assistant to the President Elizabeth Warren said that the new Bureau of Consumer Financial Protection created by the Dodd-Frank Act will operate with transparency and will strictly enforce its regulations. In remarks at the Mario Savio Memorial Lecture, the official committed to making public the advocates, lobbyists, and other stakeholders she meets with in creating the new Bureau. A key to transparency will be the annual report the Bureau will produce, which Ms. Warren called a State of the Union for Consumer Financial Issues. But remaining focused on the mission requires more than just transparency, she said, it requires engagement. Thus, the Bureau will interact with financial consumers and investors. Ms. Warren was also named Treasury Special Advisor on the Consumer Financial Protection Bureau and will play a lead role in setting up the new Bureau.

According to the Special Advisor, the Bureau will be driven by data collected from a myriad of diverse sources, including from financial institutions, from academic studies and from the Bureau’s own independent research. Importantly, the Bureau will seek data from the consumers of financial products, with appropriate privacy protections in place. Ms. Warren said that the Bureau will have an open platform that invites consumers to share their experiences with credit and financial products. Ms. Warren envisions consumers telling the Bureau what has happened to them as they have used credit cards, tried to pay off student loans, or worked to correct errors in a credit report. From consumers and investors, the Bureau can learn about good practices, bad practices and downright dangerous practices.

The Bureau will use vigorous enforcement tools to become the cop on the beat watching huge credit card companies, local payday lenders, and others in between. Technology will ensure that the Bureau’s enforcement priorities are tightly connected to the financial market realities as experienced by customers every day. In the official’s view, new technology can help the Bureau supplement the cop on the beat by building a neighborhood watch. The agency can empower a well-informed population to help expose, early on, consumer financial tricks. If rules are being broken, the Bureau will not have to wait for an expert in Washington to wake up. Ms. Warren envisions an agency that can collect and analyze data faster and get on top of problems as they occur, not years later.

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