Massachusetts Consumers Await Obama’s Appointee to Financial Consumer Protection Agency
Now that Congress has passed the 2010 Consumer Financial Protection Act, our consumer clients ask how it will affect them, who will lead the agency, and when. Daily media reports indicate that while Harvard’s Elizabeth Warren, the consumer champion, is still in the running, no decision has been by the Obama administration. While we agree that Warren’s relentless push for consumers entitles her to full consideration, our desire is that the ultimate results of “reform” are consumer focused, and not, as in the prior 2005 Act, bank focused.
A quick review may be in order. In 1994, the National Bankruptcy Review Commission was established. The author of its report in 1997 was Elizabeth Warren. Ms. Warren’s findings clearly indicated that mortgage lenders, and others, needed tighter regulation. Unfortunately, Congress rejected the proposals of the Commission and passed the 2005 Bankruptcy Abuse Prevention and consumer Protection Act. This law was written by and for the lenders and banks. Sure, it has reduced a few consumer bankruptcies. However, mostly it has increased costs to consumers: costs and interest rates to consumers went up, lending became looser, the financial crisis occurred, bankruptcies and foreclosures skyrocketed.
We are watching and waiting to see what the administration will do, what the new agency will do, and, most significantly, what the results will be.