Elizabeth Warren spoke at the White House today during the kickoff event of the Tuesday Talks series, a weekly interactive video chat on the White House website. During the session, Elizabeth Warren addressed several questions regarding her role with the new Bureau of Consumer Financial Protection (“CFPB”). As part of her comments, Warren described the past few years as the “wild west of consumer credit,” a time when financial institutions took an “anything goes” approach to offering consumer financial products. She believes that these practices have resulted in financial struggles for families who cannot pay debts or obtain additional credit. She also reiterated her position regarding the need for reform to ensure that financial products are easy for consumers to read, understand, and compare. On multiple occasions, Warren firmly stated that consumer products with “tricks and traps” will not be tolerated and indicated that people who expect to make big profits off non-compliant offers will be aggressively pursued. She stated that the regulatory scrutiny will come from the CFPB, which will serve to integrate a previously fractured web of agencies, and by partnering with state attorneys general.
Warren also commented on institutions that attempt to offset lost revenue from implementation of new consumer-friendly regulations with other charges and fees to consumers (for example, charging consumers increased fees for checking accounts). She described a major (unnamed) financial institution that recently sent a letter to shareholders indicating that the new consumer protection laws cost the company $650 million dollars in quarterly earnings. Warren said that she believes that this was $650 million dollars that “stayed in the hands of American families….from merely banning a few bad practices.” Clearly, this is a sign that Warren and others within the CFPB will take an aggressive posture towards companies seeking to recoup on lost revenue. On that note, Warren was careful to state that the CFPB does not want to solely regulate violations after they occur, but proactively supervise companies in advance to ensure that consumer laws and rules are being followed.
Click here to read more about Ms. Warren and her appointment in the Kelley Drye client advisory.