Elizabeth Warren, the special advisor setting up the new Consumer Financial Protection Bureau, fought back challenges from Republicans during a subcommittee hearing Wednesday of the House Financial Services Committee.
Warren, who declared that the foreclosure crisis would not have occurred if the Consumer Financial Protection Bureau had been in place six years ago, kept her poise during a barrage of questions from Republican lawmakers concerned about her authority and the potential impact on banks.
“You are directing perhaps the most powerful agency that’s ever been created in Washington,’’ said Rep. Spencer Bachus, R-Alabama, who is chairman of the House Financial Services Committee, saying Warren or the person ultimately appointed to head the agency will get to decide what’s an abusive practice in financial services and what’s not.
“We almost have to have good faith in your integrity and judgment,’’ said Bachus, who introduced legislation today that would create a five-member bipartisan commission to run the bureau instead. “That’s quite a burden for you and quite a burden for us.”
He pointed out that the agency has a $300 million annual budget, about the size of the Federal Trade Commission.
Other Republicans questioned why Warren was involved in discussions with the U.S. Department of Justice and 50 states attorney generals about a possible settlement over mortgage fraud accusations with mortgage servicers, even though the Consumer Financial Protection Bureau doesn’t have enforcement powers yet.
Warren defended her actions, saying she had been asked for advice by the Department of Justice and the U.S. Treasury, and she was simply giving her advice, although she declined to divulge details of the conversations.
She also said the Congress set up the Consumer Financial Protection Bureau to be headed by one person, instead of a board, to increase efficiency.
It is crucial, she said, that “we have a real cop on the beat.”
She said the consumer protection authority of the Federal Reserve and other banking regulators will be transferred to the Consumer Financial Protection Bureau on July 21.
In answer to a question about current financial regulators efforts to protect consumers, she said: “The evidence is fairly clear that they did not do their job.”
She also sought to emphasize that the agency’s goal was to make financial products’ pricing and risk clear to consumers; and that her agency didn’t have the authority to regulate financial products such as mutual funds.
“There are many people who have figured out how to return incredible profits and revenues, into the tens of billions of dollars, selling products, car title loans, remittances, we could go on and on, without making the risks and pricing clear upfront,’’ she said, “making it impossible to compare one product with two or three others.”
Republican Steve Pearce, from New Mexico, lambasted her for not giving the straightforward and clear, concise answers to the committee members she was demanding of financial companies.
“What damn business is it of yours if I want to borrow $100 and pay back $120?” he asked.