Fight For The CFPA Is 'A Dispute Between Families And Banks,' Says Elizabeth Warren
While members of the Senate Banking Committee debate proposals to fix the nation's broken financial system and ineffective approach to protecting consumers, Elizabeth Warren has one message: Pass a strong bill or nothing at all.
"My first choice is a strong consumer agency," the Harvard Law professor and federal bailout watchdog said in an interview with the Huffington Post. "My second choice is no agency at all and plenty of blood and teeth left on the floor."
There's been a steady leak of Senate proposals to fix the dysfunctional way federal regulators protect consumers from abusive lenders. One was an independent unit housed within the Treasury Department; another was a new entity, housed in the Federal Reserve, with little independence or power.
The Senate shouldn't waste its time, asserts Warren, explaining that current proposals fail to address some of her key priorities such as arming the proposed agency with independent rule-making authority, without interference by bank regulators.
"My 99th choice is some mouthful of mush that doesn't get the job done," Warren said.
The Fed proposal, attributed to Sen. Bob Corker (R-Tenn.), was leaked earlier this week. Corker is working with Banking Committee Chairman Christopher Dodd (D-Conn.) on Dodd's update to his November bill to reform the nation's financial system.
Warren spent Tuesday on the phone with reform groups, members of Congress and administration officials, rallying support for a new independent agency tasked solely with protecting consumers. Many of them were skeptical that Corker is willing to agree to let the entity have real independence, an aide to Warren said.
But "there's a lot of enthusiasm for a strong bill," Warren said. "The senators really get the main point -- either vote on something that's strong or don't do it."
The dispute, after all, is a simple one, Warren said: "It's between families and banks."
"The lobbyists would like nothing better than for the story to be the [proposed] agency has died and everyone has given up," Warren said. "The lobbyists' closest friends in the Senate would like nothing better than passing an agency that has a good name but no real impact so they have something good to say to the voters -- and something even better to say to the lobbyists."
Warren said the new agency should have four simple attributes:
- A chief appointed by the president, confirmed by the Senate;
- Independent budget authority, so it won't be subject to the whims of Congress or an anti-consumer administration;
- Independent rule-making authority, without interference by bank regulators or others who may focus on bank profitability before focusing on consumers;
- And independent enforcement powers, so the agency's investigators can go after abusive lenders.
"Those are the basic elements of an independent agency," Warren said. "It's not as if there's some fifth thing that was left off that list -- that is the list."
The House passed a bill in December calling for the creation of such an agency.
"It's a muscular agency, and that's what really matters," Warren said. House Financial Services Committee Chairman Barney Frank (D-Mass.) led the fight.
"It's not perfect -- there's no excuse for excluding used car dealers -- but it's strong," she said. "The agency that passed the House will get the job done."
Dodd, who has been under fire for the level of his commitment to a muscular new agency, reiterated his support during a Tuesday evening interview on "Hardball with Chris Matthews" on MSNBC.
"What`s really important are four points that I have been insisting upon from the very beginning," Dodd said according to a transcript of his remarks. "One, I want a presidentially- appointed director of this operation. I want it confirmed by the Senate. I want a separate funding source. And I want it to have rule-making authority and enforcement authority.
"I'm going to insist upon those four points, wherever this is located," he said.
Warren agreed with those points.
"I read his Hardball transcript and I thought: I could entirely envision Elizabeth Warren sitting there saying the same thing," Warren said.
However, much of the reporting lately has focused on where the proposed agency will be housed -- its "address," as White House spokesman Robert Gibbs put it this week. Warren said the focus is misplaced.
"It's the wrong place to look," Warren said. "The question is functional independence. Where the agency sits on an organization chart is less important than its functional independence."
"The key are the elements Sen. Dodd put his thumb on," Warren said.
Warren hasn't met with Dodd since last July, four months before Dodd publicly released the first version of his financial reform bill.
She does, however, regularly check in with other members of Dodd's committee, including Democratic Senators Jack Reed of Rhode Island and Jeff Merkley of Oregon. Warren spoke with Merkley on Tuesday regarding the Fed proposal, which severely limits the kind of power Warren wants the new agency to have.
After all, Warren said, until a new agency is created, banks are going to continue bullying families into poor loans, mortgages and credit cards.
As Warren put it:
"No cop on the beat works for the biggest bullies in town."