Elizabeth Warren took time away from her job overseeing the creation of the new Consumer Financial Protection Bureau last week to confront her critics, continuing her criticism of big banks’ policies and warning that a major victory for consumers remains under attack.
“David beat Goliath, but make no mistake: Goliath is not down for the count,” Warren said to members of Consumers Union, the nonprofit group that publishes Consumer Reports. Read the full speech here. “Families can and should be proud of their new watchdog, but they would be wrong if they take its future security and independence for granted.”
That watchdog is the CFPB, which Warren championed as a law professor at Harvard and later as the overseer of the TARP bailout program. The bureau was given broad power and independence in the Dodd-Frank Reform Act.
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Banking leaders and Republican members of Congress successfully blocked Warren from becoming director of the new agency; instead President Obama named her as his special advisor in charge of getting the bureau off the ground. Now Republican leaders have called for amendments that would reduce the bureau’s independence and subject its budget to Congressional review, and cut its budget by 40%.
“Since this new government bureau has virtually unlimited powers over a huge part of our economy, accountability demands that Congress exercise appropriate oversight,” Spencer Bachus (R – Ala), chairman of the House Financial Services Committee, told Bloomberg News.
Warren used her speech to fight back.
“Politicizing the funding of bank supervision would be a dangerous precedent,” she said. “While the banking regulators charged with preserving the safety and soundness of financial institutions and ensuring consumer protection compliance by smaller banks would continue to receive independent funding, the agency in the financial regulatory system with lead responsibility for protecting consumers would face a different set of rules – rules that threaten its independence.”
Warren plans to hold hearings in the coming week on the impact of the CARD Act. According to a study released Wednesday by the centre for Responsible Lending, which we covered here, the law has closed the gap between what credit card users thought they’d be charged and what they were actually charged by more than $12 billion a year.
Image: White House