JIM LEHRER: Now: setting up a new federal agency to protect consumers. Jeffrey Brown has our newsmaker interview.
JEFFREY BROWN: Perhaps the most contentious among government responses to the financial crisis of the last few years was the creation of the Bureau of Consumer Financial Protection. And perhaps the most polarizing figure in that debate is the woman whose idea it was and who was recently appointed to get it going, Elizabeth Warren.
A professor at the Harvard Law School, Ms. Warren served as head of a congressional panel that kept an eye on government bailout funds. And she joins me now. Welcome to you.
ELIZABETH WARREN, Consumer Financial Protection Bureau: Thank you.
JEFFREY BROWN: So, after years of writing and talking about this, here you are. What’s the first priority? When would consumers know that you — that this agency now exists?
ELIZABETH WARREN: Oh, they know now.
JEFFREY BROWN: They know?
ELIZABETH WARREN: They know in part because this agency doesn’t exist because there was some interest group behind it, because there was a lot of ton lobbying money behind it.
They know because the only reason this agency exists is because millions of American families said, hey, yes, that really sounds like a sensible deal. That’s a part of financial regulatory reform that I think is important and could make a difference in my life. They are the best allies of this agency. They are the owners of it.
JEFFREY BROWN: So, what’s the priorities? What do you do first? I mean…
ELIZABETH WARREN: Well…
JEFFREY BROWN: And is your authority clear about what you do?
ELIZABETH WARREN: So, I think the priority is to keep in mind what the end goal is.
And the end goal here is on financial products, these credit products, so that American families can evaluate how much they cost, can see the risks in them, and can easily compare one product to another. And that means what these products have to be is short and easy to read and very clear in their terms, not buckets and buckets of fine print — in between, you know, clause 16 and clause 17 lurks something else that will come out and bite you.
JEFFREY BROWN: Well, in fact, you have been very blunt in the past. And even recently you used that term tricks and traps of the banking industry. So, this is what you’re still after, and you’re not backing away from any of that?
ELIZABETH WARREN: I’m not only backing away from any of that. What I’m really doing is reaching out to the banking industry and saying, some of you want to find another way to compete for your customers. Some of you have tried to put good products out there.
But those products get overshadowed by the ones that are full of tricks and traps, the folks who can pretend to offer you zero percent financing, when the reality is, they know they’re going to make the money through the back door.
So, what I hope this is about is something that’s good for families and quite frankly something that is also good for the financial institutions that are really willing to do head-to-head competition and serve those families.
JEFFREY BROWN: Well, I introduced you as a polarizing figure. And, in fact, there was lots and lots of opposition to you taking this from the financial sector, from Wall Street, from many Republicans.
Do you have a lot of fence-mending to do here? And how are you doing that?
ELIZABETH WARREN: You know, I — I suppose people would say I have a lot of fence-mending to do. But the truth is, I just don’t see it that way.
What I see is that I’m here to help markets work for consumers. And that means lots of transparency. That means really being able to read and evaluate those products. That means some financial institutions are going to do very well.
Those who are really not afraid of the competition, who are really ready to come in and say, look, apples to apples, here’s what I offer. And I’m will to compete for my customers, not by tricking them, but I’m willing to compete by giving them better customer service, giving them lower prices, doing cool new iPhone apps. Knock yourself out on competition.
Just do it in a way that the customer can see it. Don’t do it in a way that surprises the customer through fine print, because that’s never good news.
JEFFREY BROWN: Now, I said you have been appointed to get this agency going. In fact, the president named you a special adviser to the White House and Treasury. And that was widely seen as a way of avoiding what would be expected to be a contentious Senate confirmation hearing.
ELIZABETH WARREN: I don’t think so.
JEFFREY BROWN: You don’t think so?
ELIZABETH WARREN: No, I don’t think so. So, look, there are two jobs on the table. And they were always there by statute. One certainly is the director of the agency. That’s confirmation process. In a world of secret holds in which one senator can keep you from coming to the floor for debate, that would be a very long time, likely, for this agency for anybody who got named.
And, as the president explained to me very clearly, during that process, if I were nominated, I wouldn’t be allowed to talk about the agency and I wouldn’t be allowed to do anything to help getting it stand up.
There is a second job that was available. And it’s clear in the statute. Somebody is supposed to get out there and get that agency going. And the truth is, one has a cool title, but the other one gets to work right now.
JEFFREY BROWN: So, is it an interim position that you have got, or…
ELIZABETH WARREN: I have a job for as long as the president wants me to have this job.
JEFFREY BROWN: Now, the — so it’s not an end run around getting…
ELIZABETH WARREN: It’s a different job.
JEFFREY BROWN: You don’t see it that way? Different job.
ELIZABETH WARREN: No. I mean, it’s in the statute.
JEFFREY BROWN: And a director will be named?
ELIZABETH WARREN: Of course. Of course.
JEFFREY BROWN: Now, the opposition, the critiques continue to come. Just the other day, in the op-ed piece in The New York Times, William Cohan noted the agency will cost about $500 million a year.
He says that’s a lot of — quote — “a lot of money for taxpayers to fork over every year to support a new government bureaucracy designed to protect us from our own worst impulses.”
Now, that’s the continuing — we have heard this for a while now. People made mistakes, right? People took mortgages they shouldn’t have taken, or they got credit, they accepted credit they shouldn’t have taken.
And you’re going to be out there to help that?
ELIZABETH WARREN: No. So, let me start with a couple of pieces. The first one is about the cost. We are not going to let this one slip by. The cost is designated as 10 percent of what the Federal Reserve gets, what the Fed gets. And the reason for that is, remember, the Fed all along had the power to protect American consumers, to clean up the consumer credit market, and the Fed failed to spend it, and — spend their money in that way.
And so the notion is, you say, in effect, to the Fed, OK, Fed, 90 percent of your job is what it always was. It’s monetary policy and all that other cool stuff. Ten percent is set aside for consumer issues. And that’s what this agency is about. And that’s the money it will get. This is not about spending new money.
But the second part of your question…
JEFFREY BROWN: But that’s now going — you’re saying now that will be spent.
ELIZABETH WARREN: Now it is designated.
JEFFREY BROWN: And designated.
ELIZABETH WARREN: And it will be spent not on general monetary policy. It will be spent on consumer issues. And I think that’s good.
JEFFREY BROWN: OK. And the second — OK.
ELIZABETH WARREN: But the second one, this question about personal responsibility, you know, I really just want to say here, let’s be clear.
This is not about an agency that comes in and says, oh, you shouldn’t spend money at the mall or you should do or you shouldn’t do that. This is about making sure that families have the power to make good decisions, that they can see the contracts, they can see what the stuff costs, and they can get a competitive market to start working for them.
They can compare it — right now, try it. Compare four credit card contracts and tell me which one is more expensive. You literally can’t do it. I don’t care how long you pore over it, pages and pages and pages of fine print. You will never figure out the costs.
JEFFREY BROWN: And your hope is to get that down to…
ELIZABETH WARREN: I want to get it down very short, and I want people to be able to say, oh, that’s the cheap one, because, when that starts to happen, people make better decisions, better personal responsibility, but they also have a market that’s driving down costs right at the margin for what it is to produce it.
JEFFREY BROWN: All right, Elizabeth Warren, thanks for talking to us.
ELIZABETH WARREN: Thank you.