One of America's fiercest consumer advocates, Harvard Law professor Elizabeth Warren, was tapped by President Obama last week to become the interim leader of the brand-new Consumer Financial Protection Bureau, dedicated to making sure that ordinary people don't get hammered by abusive lending practices.
What does that mean for you and your money?
Well, there's good news, bad news—and several reasons to snap awake and stay involved in this key consumer financial issue.
Warren's outspoken stance against predatory lending has been making headlines ever since she was named head of the Troubled Asset Relief Program—and it has made her several enemies on Wall Street, too.
Warren is viewed as a troublemaker, in part because she thinks the big financial institutions have gotten away with murder—er, billions of dollars—while consumers are still vulnerable to underhanded banking practices. Enter the Consumer Financial Protection Bureau.
Whether Warren stays on as director of the CFPB, the good news is that she could have a role in its initial shaping—and that could be great for Americans.
- She's on Team Consumer. Long before consumers' financial rights dominated national politics, Warren was cautioning people about the sneaky fine print in credit card agreements, risky mortgages, and predatory loans. She has spent the past three decades championing people's rights, as an expert on bankruptcy law, one of the first to identify that personal crises—not free spending—drive most bankruptcy filings.
- You may gain more control over your money. Warren has always maintained that consumers will make smart choices if they understand their options. A Bureau that mandates clearer rules and disclosures about the options on loans and credit cards—and enforces those newly established by the CARD Act—is what ordinary spenders and borrowers need.
- You and your money could be better protected. One of the Bureau's main jobs will be to enforce the CARD Act, which regulates predatory practices among credit cards. While the regulations have made it harder for banks to raise rates and slap on fees without warning, companies are still coming up with new tricks, so putting teeth in those rules is key.
- Your faith in banks could be restored. Many people in the anti-Warren camp have feared that her stance has been too tough on big banks. But Warren's appointment to the CFPB may ultimately help Wall Street, if consumers regain confidence in the banking system.
I'm thrilled to think that Elizabeth Warren, who has always represented middle class America, will be steering the direction of this new bureau. Perhaps now, consumers will have a fighting chance!
|Speak up. What should the newly forming Consumer Financial Protection Bureau tackle first?|
|Beth Kobliner is the author of "Get a Financial Life" and a monthly columnist at Redbook. She can be heard on the nationally syndicated public-radio show “The Takeaway.” Visit her at bethkobliner.com.|