WASHINGTON — The new consumer agency will focus on stronger across-the-board regulations that will make the credit market function better and protect consumers, the agency's chief architect, Elizabeth Warren, said today.
"Targeted rules don't fundamentally change credit markets," she said at the annual meeting of the Consumer Federation of America.
Warren, who is setting up the agency which will begin operating as part of the Federal Reserve July 21, said the goals will be to create a regulatory framework that will fix a consumer credit marketplace that is essentially broken.
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"Too many creditors use complex forms so it is harder to determine prices at the beginning of the transaction," she said.
Though the financial overhaul legislation that created the consumer bureau gave it considerable power, Republicans who will control the House next year have promised to watch it closely and try to limit its reach.
Before Warren addressed the group, Rep. Randy Neugebauer, a senior member of the Financial Services Committee, told the group that his panel would "carefully watch the implementation of the rule-making process."
Neugebauer (R-Texas) said the new bureau has "very, very broad powers." He added that even if they try, regulators can't take all the risk out of the marketplace.
Warren said that stronger regulations will also help those financial institutions that issue credit products that appeal to consumers.
"When competitors can obscure the price of credit, companies that make cheaper or better products can't compete," she said.
Warren, who first proposed the idea for the new bureau in an academic journal article, has been appointed by President Obama to help set it up. He hasn't named her to run the agency because several senators, including outgoing Banking Committee Chairman Christopher Dodd, have said she was too controversial to be confirmed by the Senate.
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