Consumer advocate feared by financial institutions appears in Baltimore

On Capitol Hill, some lawmakers treat Elizabeth Warren as if she were Public Enemy No. 1.

That's what happens when you're charged with setting up an agency whose purpose is to protect consumers on financial matters — a job that brings you up against supporters of banking interests.


But in Baltimore, where the Harvard law professor spoke at a town hall meeting held by Rep. Elijah E. Cummings last week, she received rock-star treatment. In fact, she was called a "rock star" a few times and received two standing ovations from the overflowing crowd at the Enoch Pratt Free Library auditorium.

Even Cummings, a Baltimore Democrat who has focused on the mortgage crisis in his district and beyond, veered from his prepared remarks before Warren's arrival.


"I can't even get over my excitement," he said. "I don't get too excited about many things."

The Consumer Financial Protection Bureau officially opens July 21, when seven agencies turn over their consumer-protection duties under 19 federal statutes to the new agency. This will be the first time that consumers will have a federal regulator that puts their interests at the top.

It was Warren's idea to create an agency dedicated to protecting consumers, and her supporters want President Barack Obama to nominate her as its first director. But the director must be approved by the Senate. And Republican opposition therenot only to Warren, but to the new agency itself — has been fierce.

Republicans have introduced a series of bills aimed at weakening the agency and enabling Congress to control its funding. Nearly all Republican senators recently vowed not to confirm anyone — even a fellow Republican — to lead the agency unless the structure was changed to reduce its influence and independence.

Without a director, the bureau's oversight will be more limited.

"The [Consumer Financial Protection Bureau] is truly David, created to defend American consumers against the Goliath that is Wall Street," Cummings told the crowd. He noted that the bureau's maximum budget — $329 million — is less than 1 percent of the $57.7 billion that banks collected in late and overdraft fees last year.

True to her reputation for straight talk, Warren frankly discussed the role of the new agency and the resistance to it.

"We are an agency that was born with enemies — with those who don't want us to exist, who don't want us to be strong, who don't want us to be independent," Warren said.


She said working in Washington has been tough. But Cummings has been an ally, who repeatedly tells her, "I've got your back," she said.

"Without that, there are days I might have given up. I don't know, but I might have," she said.

He certainly had her back at a House oversight subcommittee hearing in May, when Rep. Patrick McHenry, a North Carolina Republican, accused Warren of speaking untruthfully during a testy exchange. Cummings, the senior Democrat on the subcommittee, came to her defense.

"I am trying to be cordial here," Cummings said, "but you just accused the lady of lying."

Warren said the new bureau won't be able to fix everything that is broken in America. But it can clarify all of the complicated documents required for student loans, credit cards, checking accounts, mortgages and other financial products so consumers can better understand them.

"We shouldn't be asked to sign documents that we can't read, that were designed not to be read, that have surprises hidden in the back," she said. "We shouldn't live in a world where the price of what we are getting ready to buy isn't clear, where the risks are hidden from sight."


In 1980, she said, a credit card agreement had 700 words. Now agreements are so complicated, she said, that it is impossible for consumers to make side-by-side comparisons between cards.

She said clear documents also will be good for businesses that play fair but have lost out to predatory companies that disguise the true cost of their products and services.

One member of the Baltimore audience asked what can be done in urban neighborhoods where payday lenders, pawnshops and check-cashing stores are replacing community banks.

Warren said community banks that operate under the burden of regulation have shrunk, while unregulated nonbanks have been able to thrive. The bureau will have oversight of these nonbanks and can level the playing field, she said, but only when there is a director heading the agency.

The agency also won't have jurisdiction over student loans until a director is appointed.

An audience member who said she wants Warren to become the director asked if there are any other candidates for the job that consumers could support. Another asked why the president can't appoint a director when the Senate is in recess.


Warren said some senators have made it clear that they won't support anyone for the position of director and will block the chamber from going into recess to prevent the president from naming one.

"This is a nasty game that's going on," she said.

Cummings nodded toward Warren and said: "This is my candidate."

Warren said she worries about "regulatory capture," where an agency starts out safeguarding the public, but over time gets too cozy with the regulated industry and ends up protecting the industry's interests instead. The best way to combat that, she said, is to make the agency as transparent as possible.

The Consumer Financial Protection Bureau is trying to do that by posting all of its activities, including Warren's schedule, online. For instance, the agency is trying to simplify mortgage disclosures. It put up two samples on its website and asked people to vote for their favorite. The site got 100,000 hits, and more than 14,000 people offered feedback. The bureau made changes based on the suggestions and now is seeking comment on the revised forms.

Asked what her supporters can do to help, Warren suggested visiting the agency's website at regularly and signing up to follow its activities.


"Congress needs to know that constituents are paying attention to this," Cummings said. "That's so important."

He added that he would like to be able to point to heavy traffic on the bureau's website when Warren testifies before the House oversight committee next week.