TARP Overseer: Consumer Financial Protection Still Not Enough
TARP Overseer: Consumer Financial Protection Still Not Strong Enough
NEW YORK -(Dow Jones)- As the debate on Capitol Hill on consumer financial reform comes to a head, a leading academic and chair of Congress's oversight panel for the Treasury's bank bailout program blasted the government for bowing to the whims of big banks.
Elizabeth Warren, chair of the Congressional Oversight Panel of the Troubled Asset Relief Program and a law professor at Harvard University, said in a speech Wednesday that Congress needs to do more to protect families from complicated credit card contracts and confusing agreements that banks use to shield themselves at the risk of consumers.
Of the many lessons learned from the financial crisis, Warren said at a conference hosted by the Roosevelt Institute in New York, "none is more important than the need to have more meaningful rules for the market."
Other conference speakers on the schedule include former World Bank chief economist Joseph Stiglitz and billionaire investor George Soros, chair of Soros Fund Management.
Warren said the regulatory system is bloated, bureaucratic and ineffective, noting that oversight of consumer protection is scattered between seven agencies, with none taking the lead. She noted that the Office of the Comptroller of the Currency, for example, is funded by the banks it regulates, not Congress.
"The power resides with the big banks, not the regulators," she said.
This confused system "helped bring our country to the edge of financial collapse," she added.
Warren struck a populist tone in her speech, noting that "Congress is supposed to work for us, not for the bullies" and claiming that big banks are more focused on short-term profits than the well being of families.
Her comments followed the release of a report from the Roosevelt Institute that included contributions from Warren, and Robert Johnson, former chief economist to the Senate Banking Committee, among others.
The report concludes that financial markets aren't subject to critical market principles, including transparency, competition, the free flow of information and the opportunity to fail.
-By Riva Froymovich, Dow Jones Newswires; 212-416-2217; riva.froymovich@ dowjones.com