Full interview: Elizabeth Warren on protecting consumers

Marketplace Staff Dec 11, 2010


STEVE CHIOTAKIS: Madam Professor, thanks for being with us.

ELIZABETH WARREN: It’s a pleasure.

CHIOTAKIS: The Dodd-Frank Wall Street Reform and Consumer Protection Act, boy it’s a long title, was passed back in the summer. How would you say the implementation is going?

WARREN: Oh, for the consumer agency, it’s going gangbusters. We are getting started, starting to build all the pieces. It feels a little like building an airplane you know, lots of complicated parts to it but lots of possibility if we get it put together the right way.

CHIOTAKIS: What will be the first thing do you think consumers will notice as a result of the Consumer Financial Protection Bureau?

WARREN: Oh I think they should already be starting to notice. We’ve identified our priorities as making the price of credit clear, as making the risks associated with the credit clear, and making it easy to compare one product to another. In other words, it’s about simple, it’s about no tricks and traps, and I think what we are starting to see is some number of lenders who are starting to change their products saying, “That’s us! That’s us!” because I think they realize that’s what American families want.

CHIOTAKIS: Would you…Do you think have had more authority to set things up had you been named the official, the full-on Head of this bureau?

WARREN: You know, there were always two jobs on the table. One was to be nominated to be the Head, which would mean hearings and back and forth and probably something going on by some time early next year or the President said in the alternative, “There’s a job getting started right now to get this agency going. Get in there and start making it happen.” And I said, “What I’d really like to do is start making it go right now.” And I’ve been here a little over two months and I haven’t regretted the decision at all. There’s been a lot of work to do and a lot of choices to make and a lot of pieces to put in place and it’s been a very exciting time.

CHIOTAKIS: You are doing the latter of course, but you’ve mentioned the former. Do you want to be the Head? Is that where it’s going?

WARREN: You know, I’ll give you the other half of this. I’m working fifteen hour days right now and have so much on my plate. I’ve got enough to keep my mind occupied without thinking about that issue.

CHIOTAKIS: But the issue being…you talk about hearings and there is a lot of politics involved in this, and I don’t think Conservative Senators and Congress folks on the Hill have made any qualms about the fact that they think you’re Liberal and maybe someone else would be better suited for this position. I mean, how do you view all that?

WARREN: I am just not much on the politics. I think that questions like should the price of a credit card be clear up front? Should the risk of a mortgage be obvious in advance? Should a person who is getting ready to borrow money be able to compare the particular offering they’ve got with three or four others? I don’t think those are political questions. I think that those are questions that middle-class families worry about and they worry about in connection with their credit. And I’m trying to get an agency built that can help make sure that that’s the case and that’s what the agency keeps its focus on. So I’m just not much in to the questions about Democrat and Republican and Libertarian and any other part of it. This is about making markets work for American families.

CHIOTAKIS: What do you tell people who think government shouldn’t have its hands in this at all?

WARREN: Oh gosh! I say, “Really? Have you watched how markets work when the government is not paying attention to some basic rules of the road?” That’s like saying you don’t want any cops on the beat. In that case, you end up in a world where people who want to offer good products can’t do it because they’re having to compete with those who are willing to offer products loaded with tricks and traps. You know, in the last two months I have met with CEO’s of the largest financial institutions and some of the smallest financial institutions, and some of them have really driven home the point to me that when they offer a product and the price is clear up front, they appear to be a lot more expensive than the guys who are willing to pretend to offer it for three percent or one percent or zero percent financing, knowing they are going to make all their money on the back end in fees and interest rate and so-called re-pricing. That’s a market that doesn’t work, and the job of the government…the job of the cop on the beat is to say, “Hey look! Everybody has got to be willing to tell up front what the real cost is.” That’s what causes markets to be competitive. That’s what causes them to work on behalf of middle-class families.

CHIOTAKIS: How do you think the Republican takeover of the House is going to affect Wall Street Reform and specifically Consumer Protection?

WARREN: I don’t know that it will have any particular impact on Consumer Protection. What we are doing is building this agency to try to work on behalf of middle-class families. And I would be very surprised if there were politicians who really wanted to jump in front of that and say, “No, I really don’t think you ought to be out there working trying to make the price of credit products clearer, or trying to make it so that families can make better financial decisions.”

CHIOTAKIS: But couldn’t they sort of disguise that as something else? Couldn’t they say, “Oh, they are going to make it more complicated!” or “Oh, fewer people are going to have access to this credit.”

WARREN: You know, they can say what they can say but the truth will be what the agency actually does. I came to you out of a meeting with the Texas Community Bankers and we had a serious heart to heart conversation about the fact that we really want to work together. They want to be sure that they have the opportunity to serve hard working families and they don’t want to be crushed by a crazy regulatory system that makes no sense. And we here at the Consumer Agency want to be able to do the same thing…make sure that families can see the products that they are getting and that there is a strong and diverse banking system. You know, it’s really at the end of the day it’s going to be what you have to offer. We’ve had good, good conversations with the folks who want to get out there and compete in this industry and good conversations with families. If the politicians want to wade into the middle of that, I can’t stop them.

CHIOTAKIS: Where do you see this thing in ten years, twenty years…fifty years?

WARREN: I’ll tell you where I hope it is in ten years…and that is that we have credit markets that work, that are competitive markets like the kind of markets that we have for other consumer products so that people are able to make good decisions for themselves financially, they are able to compare products easily. And that means markets are really working. I think that drives down costs and I think it increases choices for families. Good markets can work and they can work for families, they can work for competitors, they ultimately work for the entire economy. That’s where I hope things are, that’s certainly the direction that this agency is going to try to drive things.

CHIOTAKIS: And what about your original idea? Is this sort of forming along those lines? Are you happy with the way it’s working out?

WARREN: I’m really happy with the way it’s working out. Congress effectively said, “It’s time to pay some attention to this consumer credit market. It’s time because middle-class families have been hammered on for a generation in lots of different directions… flat income, rising core expenses. They borrow money to go to school, they borrow money to pay for medical expenses, they borrow money to make it to the end of the month. And in many cases the money they have been borrowing from has come in ever more dangerous forms and Congress has said, “We have got to pay attention to that.” That is what they said when they set up the Consumer Agency. And now we have a real chance. You know, we can’t fix everything for middle-class America but we can certainly repair a very big hole in the bottom of the boat. This agency can be really good for America!

CHIOTAKIS: Professor Elizabeth Warren from Washington D.C. Professor, thanks!

WARREN: Thank you for having me.

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