POSITION: Chairwoman of the Congressional Oversight Panel that monitors how the government spends its TARP (Troubled Asset Relief Program)
LOCATION: Washington, D.C.
EDUCATION: University of Houston, Rutgers School of Law
A controversial centerpiece of the Obama Administration's plan for overhaul of financial services regulation is the creation of an independent agency to oversee consumer financial products, like credit cards and mortgages. The agency would be called the Consumer Financial Protection Agency (CFPA). Dreamt up years ago by Harvard University Law School Professor and lifelong consumer advocate Elizabeth Warren, the idea gained currency with the current White House earlier this year. Warren, who is also Chairwoman of one of the key oversight panels for the government's bank bailout plan, not only has Obama's ear. She also seems to have a strong following in Congress for her work on the bailout panel, and the proposal made it into banking reform legislation introduced in early May by Senator Dick Durbin (D-IL).
Warren and other supporters of the idea say that under the current system, there is no unified set of rules for mortgages or other consumer financial products; rather, the rules vary from one kind of issuer to the next. This makes it very difficult for consumers to understand the complex products they are buying. Furthermore, say Warren and others, under the current system, regulators tend to compete to serve the banks and the thrifts, rather than offering tough oversight aimed at protecting consumers.
Of course, the idea has its opponents, too. The Federal Reserve, the Office of the Comptroller of the Currency (OCC) and the Office of Thrift Supervision today share jurisdiction over consumer products and want to keep it that way. Financial institutions say that product design has an important impact on the solvency of issuers, so regulation of products should not be separated from regulation of the financial services institutions that design them. And some argue the CFPA would stifle financial innovation.
Whether one is for or against the proposed agency, Warren will be one to watch. When she weighs in on financial services regulation, people in Washington seem to listen.