Imagine a map of the U.S. highlighting hotbeds of consumer financial woes: auto-loan complaints in red; reverse-mortgage issues in yellow; and payday lender problems in orange. Imagine that millions of individuals provided the input to create it, and that a high-level consumer watchdog acts on it quickly to help those consumers out.
That map reflects the vision of Elizabeth Warren, special assistant to the President in charge of implementing the new Consumer Financial Protection Bureau. Prof. Warren, visiting Consumer Reports earlier this month for its 75th anniversary celebration, said that establishing the brand-new agency in the digital age offers consumers the opportunity to report problems in an instant, and for the agency to be "smarter, better and faster" in analyzing the data and responding.
"Everybody who's got a telephone, a [smart] phone, everybody who's got a computer, is really one more person who can tell us what's happening out there," Warren said. "We're trying to construct this agency to be able to recieve information ... compliants ... questions, and then in real time to be able to heat map what's going on, where the problems are."
The CFPB's Web site
opened this month—six months ahead of schedule and in a beta version, Warren quipped—to receive suggestions and comments from consumers via e-mail, blog comments, Facebook comments, Twitter, and other electronic options. Ultimately, the Web site is expected to field consumer complaints
about lenders. (The agency also will accept snail mail.)
The CFPB officially opens for business on July 21. At that point, it will take over rule-making, supervision and enforcement powers from seven different agencies currently charged with some aspect of consumer financial protection. Warren said centralizing that control would benefit consumers. "We take the same set of laws and instead of scattering them around among agencies who really have other priorities, we put them all with one agency that is dedictated entirely to the consumer and ... directly responsible to the consumer," Warren noted.
Wall Street Reform and Consumer Protection Act gives states authority to enforce consumer protection laws stronger than those of the federal government. Warren said the CFPB is actively developing relationships with state attorneys general to deal with consumer concerns. In fact, Ohio's former attorney general, Richard Cordray, has been named head of the bureau's enforcement division.
Warren spoke enthusiastically of projects now in development, including divisions devoted to the financial problems of the elderly, students, and members of the military. "Those are three groups of people who have been targeted in particular for some really bad products, and three groups that face some particular financial challenges," Warren said. The Office of Servicemember Affairs, led by Holly Petraeus
, wife of David Petraeus, commander of U.S. and NATO Forces in Afghanistan, already is in operation.
But Warren warned of continuing efforts to defang the CFPB
. Under Dodd-Frank, the CFPB as an independent body within the Federal Reserve is entitled to 10 percent of the Fed's annual budget. Yesterday, Republican lawmakers working on a temporary spending bill moved to limit Fed transfers to $80 million, $54 million less than what's stipulated in President Obama's 2011 budget. Another proposal
would move the bureau to the Treasury, where, unlike any other banking regulator, it would be subject to the appropriations process, and potential lobbying.
"The whole point of that design is to get the consumer agency to be quiet, and to be docile," Warren said. "That would be a terrible result." —Tobie Stanger