Now that Elizabeth Warren will be the special adviser for the new Consumer Financial Protection Bureau, what can consumers — as well as banks and credit card lenders — expect?
The cornerstones of the new bureau are already in place. The CFPB will act much like the Consumer Product Safety Commission, regulating consumer products in the U.S. The big difference is that the new consumer financial board will regulate financial services products like credit cards and bank checking accounts.
The CPFB won’t have to answer much to Congress — it will have wide latitude on what financial institutions can and cannot do when dealing with consumers. Warren will likely steer the board toward much more strident rules that will favor consumers and attempt to keep banks and credit card companies in a regulatory box.
Here are some key priorities that the new board is likely to address right out of the gate:
Slashing Credit Card Fees
Warren’s already noted the abuses credit card companies inflict onto their consumers. In fact, her testimony in front of Congress in 2007 on the need for such a consumer protection board is required reading for anyone interested in how the CFPB will operate, especially as it relates to credit card abuses. Expect the board to bring credit card issuers’ hidden fees into the light, especially those “trips and traps in fine print.”
Reforming Big Banks
The new law gives the CFPB the power to enforce rules on banks and financial institutions with $10 billion or more in assets. That language will help the bureau facilitate limits on credit card fees or demands for big mortgage lenders to produce clear cut mortgage loan contracts. Smaller banks and credit unions fall outside the regulatory oversight of the new agency, however.
Managing Student Loans
The consumer board will place particularly close attention to privately-funded student loans. The financial reform bill will once again focus on bigger lenders (more than $10 billion in assets), and will create a private student loan ombudsman who will handle borrower complaints and make policy recommendations to both the White House and Congress.
By no means are these the only priorities of the new CFPB. Although they are at the top of the list. Banks and lenders know that there’s a new sheriff in town, and she’s looking to change the dynamic between financial institutions and their customers.
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