Where We Live: Elizabeth Warren on Financial Reform

Among other things, it calls for the creation of a Consumer Financial Protection Agency within the Federal Reserve – an idea Warren (almost completely) supports.  She told Where We Live that an agency like this would streamline a system that currently has seven different bureaucracies that deal with consumer financial protection.

“This is an agency that says something very straightforward:  people ought to be able to read and understand their credit agreements.  No more 30-page credit card agreements that are loaded with fine print.  No more stacks and stacks of mortgage documents that no one reads and no one understands.  No more hidden kickbacks on car loans.  It needs to be out there, it needs to be in clear language, it needs to be short and readable.”

But – and here’s the big but – Warren has long supported more independent oversight than what Dodd’s bill proposes.

“Senator Dodd has said ‘Let’s put it in the Fed to try to get something that’s bi-partisan and okay with the Republicans, but let’s give it lots of teeth to try to make it functionally independent.’  So, you’re right when you say I’m a little bit caught between here.  I like an independent agency.  But ultimately, if it does have the tools to be functionally independent, then I think what Senator Dodd has done will turn out to be okay.”

The American Bankers Association has said it opposes Dodd’s bill, and is lobbying hard against it.  They say this kind of financial reform will jeopardize the soundness of banks.