The Wall Street Journal
By: Maya Jackson Randall
July 15, 2011
Obama Adviser Lays Out Scope of Soon-to-Launch Consumer Protection Agency.
White House adviser Elizabeth Warren said Thursday the Consumer Financial Protection Bureau isn't seeking to ban certain financial products, addressing Republicans' questions about the scope of the consumer-watchdog agency set to open its doors this time next week.
Banning fraudulent financial products and services "is a tool in the toolbox, and that's where it should stay," Ms. Warren told lawmakers at a congressional hearing. "We don't have any present plans" to use that tool. Ms. Warren before hadn't been as explicit about the scope of her agency's powers.
U.S. House Republicans pressed Ms. Warren, a longtime banking-industry critic, for details about how the bureau will regulate financial products. Many GOP lawmakers fear the bureau will use its broad power to outlaw certain products. Lawmakers asked if the new agency would ban products such as payday loans and cap interest rates, and if the agency would oversee auto loans and insurance products.
"The American people have a right to know how the bureau will advance and enforce its regulatory assignment," said Rep. Darrell Issa (R, Calif.), who leads the House Oversight and Government Reform Committee, which held the hearing. Numerous questions remain about how the agency will act, they said.
Ms. Warren contended the bureau worked under constraints, disputing the idea it has power to regulate every financial product. She pointed out that the bureau has only "limited" power over business credit cards. Also, under the Dodd-Frank Act, the agency can't cap interest rates.
The bureau is a key but hotly contested plank of the Dodd-Frank financial overhaul, which Congress passed last year despite objections from the financial industry and many Republican lawmakers. The bureau will inherit authority over consumer-finance laws currently being enforced by the Federal Reserve, Federal Trade Commission and other agencies on July 21, when it officially launches as a new financial-markets cop. The bureau will be able to write new consumer protection laws and supervise financial firms to ensure they aren't offering products that hurt consumers.
Democrats, meanwhile, praised Ms. Warren for taking steps to protect American consumers. "I do believe Warren has done her very best to make sure that every American can live the very best life they can," said Rep. Elijah Cummings of Maryland, the oversight panel's top Democrat.
Write to Maya Jackson Randall at Maya.Jackson-Randall@dowjones.com