Friday, September 17, 2010

White House Names Elizabeth Warren to Advise New Consumer Financial Protection Bureau

This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reporter.

In a post to the White House blog today, Harvard Law School professor Elizabeth Warren said that she has agreed to serve as an Assistant to the President and Special Advisor to Treasury Secretary Timothy Geithner on the Consumer Financial Protection Bureau. An official White House announcement followed.

The agency was created by the Dodd-Frank Wall Street Reform and Consumer Protection Act. The law transfers functions relating to consumer financial protection from the Federal Trade Commission and the federal banking agencies to the Bureau of Consumer Financial Protection, an independent bureau within the Federal Reserve System.

In the coming months, it should become clearer how the new agency and the FTC will share their consumer protection authority. The relevant consumer laws include the Equal Credit Opportunity Act, the Fair Debt Collection Practices Act, the Truth in Lending Act, and provisions of the Gramm-Leach-Bliley Act and the Fair Credit Reporting Act, among others that pertain to mortgages and credit. The law calls on the agencies to coordinate with respect to rulemaking where there is an overlap of authority.

Within the FTC Bureau of Consumer Protection, the Division of Financial Practices currently regulates the marketing of certain financial products as well as the provision of debt collection and relief services. It also enforces consumer protection laws in the mortgage servicing industry.

The new agency is expected to promulgate reforms that make mortgage documents, credit card agreements, and student loans easier to understand.

Warren, who is credited with developing the concept of a federal financial consumer watchdog agency, explained: “the new consumer bureau is based on a pretty simple idea: people ought to be able to read their credit card and mortgage contracts and know the deal."

"The new law creates a chance to put a tough cop on the beat and provide real accountability and oversight of the consumer credit market," she added.

“The Consumer Financial Protection Bureau will be a watchdog for the American consumer, charged with enforcing the toughest financial protections in history,” the President said in announcing the appointment. “I am very grateful that Elizabeth has agreed to serve in this important role of getting the Consumer Financial Bureau up and running and making it as effective as possible.”

The president has called Warren a “tremendous advocate” for consumer protection. There was speculation that Warren might be named by President Obama as an interim director to head up the new agency. The interim appointment would have avoided a potentially difficult Senate confirmation process. Warrens' appointment to the advisor role sidesteps any controversy over avoiding the confirmation process.

She has written extensively on the subject, including authoring or co-authoring several books and treatises for Aspen Publishers.

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