Consumer protection adviser Elizabeth Warren said part of her job will be to create a set of rules not just for consumers, but for small lenders to compete against big banks and other institutions.
“We’ve got folks who want to play by a clean set of rules competing against folks who don’t,” Warren said in a speech to a meeting of the National Association of Federal Credit Unions in Washington.
“The job of regulation is not only to level the playing field between consumers and the lender, it’s often to level the playing field among the lenders so that everybody is competing on a straight-up basis,” Warren told the group.
“The whole financial services area has gotten badly out of whack,” Warren said.
The speech was her first since President Barack Obama named the Harvard Law professor to help build the new Consumer Financial Protection Bureau. Warren, 61, is credited with inspiring the idea for the agency, which will have broad oversight of consumer credit products, including mortgages and credit cards.
“We were especially pleased to hear that she is very concerned about smaller institutions being overburdened by regulation and unable to compete with the nation’s largest banks,” Fred Becker, president of the credit union association, said in a written statement.
Treasury Secretary Timothy F. Geithner said today that he expects Warren would be willing to testify before Congress on her role helping to set up the new agency. Speaking before the House Financial Services Committee, Geithner also said Obama planned to nominate a director of the new bureau “at an early date” for confirmation by the Senate.
“Before there is a confirmed director in place, this agency by statute has very limited authority to actually write new rules,” Geithner said, adding that the agency would not be fully up and running until at least July 2011. “We’re going to try to use that interim period to try to build a stronger consensus among the major players on how to improve disclosure, do things like that.”
Calling herself a “long-time member” of a credit union, Warren said she viewed the industry as an ally in the fight to protect consumers.
“I think that consumers and credit unions should be on the same side of the line,” Warren said.
“If at the end of the day we don’t have a robust -- and this is very important -- a diverse banking system that has different kinds of providers that come from a lot of different perspectives, offer different products, then we will have failed,” Warren said.
Warren has said that small banks and credit unions, which are financial cooperatives that operate under different rules than banks, are an important part of a functioning financial market. About 70 million Americans belong to a credit union.