Elizabeth Warren, Harvard law professor and chairwomen of the Congressional Oversight Panel, has been credited with the idea for creating a Consumer Financial Protection Agency (CFPA). She recently offered a helpful Q&A about why we need a new agency to protect consumers from dangerous financial products.
Last year, the Senate tapped Elizabeth Warren to head the panel overseeing the Emergency Economic Stabilization Act (aka the financial system bailout). She has also been a driving force in the call for a federal agency to protect consumers from dangerous financial products (much like they are protected from dangerous physical products by the Consumer Products Safety Commission).
Warren began calling for such a new agency in 2007, with her article "Unsafe at Any Rate." Now, with portions of the financial industry (and their lobbyists) mounting increased opposition to any such new protections, Professor Warren sat for a very helpful Q&A discussing why additional protections are needed and what they might look like. She summed up why consumers need protection in 5 words: The credit market is broken.
Warren breaks down the need for more protection into three main points:
As Professor Warren explains, big banks and their lobbyists have a war chest to fight the creation of a CFPA. From her point of view, this is similar to their attempt to fight the creation of regulations we've come to know and trust, like FDIC insurance to name just one.
We'll see if the same can later be said of a CFPA.