Will The US Get a Tough Consumer Banking Regulator?
How often does a bank regulator feature in a rap video? Check this out.
Elizabeth Warren, a Harvard law prof who is now in line to become head of the new Consumer Financial Protection Bureau, an idea she proposed and Congress recently wrote into its financial reform legislation.
Joe Nocera in The New York Times cited it in his Saturday “Talking Business” column, which is always worth reading.
The lyrics are not exactly what you expect from a YouTube video:
“Sheriff Warren’s what we need-o/ She’s not about the money and the green-o… /She wants to expose the banks and all the greed/ and get rid of unnecessary fees/Which means more money in my pocket?”
In the late 1980s, writes Nocera, she did a landmark study with Jay Lawrence Westbrook on personal bankruptcy in the US which refuted bank claims that consumers filed for bankruptcy because they were too lazy to pay off their debts.
People who filed for bankruptcy were genuinely in over their heads, the researchers found. They had accumulated debt they couldn’t repay because they had lost their jobs or had some other life event that robbed them of their ability to earn a decent paycheck. They were often middle class, homeowners even. They filed for bankruptcy because they were desperate. Looking through thousands of bankruptcy filings, Mr. Westbrook said a few days ago, “you got a sense of human beings in real trouble.” He added, “All of us were very much affected by what we found in those files.”
She uses very clear language, accusing the banks of “tricks and traps, and fleecing their customers. She wants credit card contracts written in plain English that a high school student can understand to end the practice she terms “cheating by contract.”
Nocera says that Timothy Geithner, Treasury secretary, would prefer to have one of his deputies take the slot, and President Obama hasn’t made any decision yet.
But if she does win the job, she could set a new global standard for bank regulation and encourage others to take a tougher stand with financial institutions.
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