Another round of sparks is likely as Elizabeth Warren heads back to Capitol Hill
July 13, 2011 |
| Elizabeth Warren |
Just a few days after issuing tough new oversight procedures for banks, consumer advocate Elizabeth Warren appears before the House Committee on Oversight and Government Reform Thursday, for the second time this year, an appointment she would probably rather skip.
The last time Warren paid a visit, having come to answer questions about the creation of the new Consumer Financial Protection Bureau (CFPB), the hearing kicked off with subcommittee chairman, Rep. Patrick McHenry (R-N.C.) accusing Warren of lying.
It was the first of many attacks over the subsequent hour. For good measure, Rep. McHenry ended the meeting by telling Warren: “You're making this up.”
The Committee has titled the Round 2 affair: "Consumer Financial Protection Efforts: Answers Needed," indicating the gloves are sure to be off once more.
Why has Warren become the punching bag for Republicans and business interests looking to publicize their anger and frustration with consumer protection measures?
The only thing they have to fear ...
It’s been suggested they're afraid of Warren, the outspoken Harvard law professor who first came to public notice back in 2000, when she published a study finding that half of Americans filing for bankruptcy were doing so because of medical bills and other problems arising from serious illness or injury – not because they had spent their earnings recklessly.
That study was published as Congress was considering a number of “reform” measures suggested by its patrons in the banking and financial services industries, measures that make it more difficult for consumers to seek bankruptcy protection.
More recently, Warren has been directing the set-up of the Consumer Financial Protection Bureau (CFPB), which she describes as a “cop on the beat” protecting consumers against predatory financial practices.
It is in that role that she yesterday issued the CFPB's approach to supervising large banks to ensure that they comply with new consumer financial protection laws, a process that will formally begin in just a week, on July 21.
Bank oversight
“The new consumer agency is here to make sure that markets work for American families, and our bank supervision program is a big part of that,” said Warren, whose official title is Special Advisor to the Secretary of the Treasury on the CFPB. “Starting on July 21, we will be a cop on the beat – examining banks and protecting consumers.”
Leading into the recent financial crisis, consumer financial protection authorities were spread among seven different federal agencies. The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) streamlined consumer protection oversight authority into the CFPB – promoting greater efficiency and accountability for American consumers.
The consumer agency will conduct examinations to help ensure that consumer financial practices at large banks conform with consumer financial protection legal requirements. The CFPB’s bank supervision program will oversee the 111 depository institutions that have total assets over $10 billion. Subsidiaries and all other affiliates of these institutions also fall under the CFPB’s authority. These institutions collectively hold more than 80 percent of the banking industry’s assets.
Examiners will work throughout the country, managed out of satellite offices in Chicago, New York, San Francisco, and Washington, D.C., and will spend much of their time on-site at depository institutions and at other consumer financial services companies.
A large part of the CFPB’s supervision staff will be made up of experienced examiners: By the end of July, the CFPB supervision team will include more than 100 staff members transferring directly from the Federal Deposit Insurance Corporation, the Federal Reserve System, the Office of the Comptroller of the Currency, and the Office of Thrift Supervision.
The CFPB expects eventually to have several hundred examiners on board, coming from a variety of backgrounds, including state regulatory agencies and industry. Experienced examiners will sharpen their skills in workshops before being deployed, and examiners new to consumer financial protection will receive extensive technical and professional skills training, the agency said.
What happens next?
In this video, supplied by the CFPB, Warren talks about what is next on the agency's agenda.