Consumer advocate picked to create regulation agency

September 18, 2010 at 12:00a.m.

Associated Press

WASHINGTON

In a poke in the eye to the financial community, President Barack Obama on Friday chose Elizabeth Warren, an aggressive consumer advocate and Wall Street adversary, to oversee creation of a new agency to regulate banks, lenders and credit-card companies.

Sidestepping a Senate confirmation fight — for now — Obama stopped short of nominating Warren to actually head the new Bureau of Consumer Financial Protection. Instead, his action will let the Harvard Law School professor and expert on bankruptcy move quickly to shape the bureau.

Senate Republicans view her as too critical of Wall Street and big banks. The business and banking community opposed Warren as director of the new bureau, contending she would make the agency too aggressive. Obama praised her highly.

“Never again will folks be confused or misled by pages of barely understandable fine print that you find in agreements for credit cards or mortgages or student loans,” Obama said, standing alongside Warren and Treasury Secretary Timothy Geithner in the White House Rose Garden.

Billed as a big help to abused consumers, the new bureau is charged with writing and enforcing new rules covering the largest banks to the smallest storefront payday lender. Lenders will face new restrictions on the type of mortgages they write and won’t be rewarded for steering borrowers to higher-cost loans. The bureau also is to protect borrowers from hidden fees and abusive terms.

Obama named Warren a special assistant to the president, giving her an influential province from which to direct the new bureau, a central element of the sweeping financial overhaul Obama signed into law this summer.

An Oklahoma native who was a state high school debate champion, Warren, 61, was the architect of the consumer bureau, calling three years ago for the creation of an agency to consolidate the consumer protection powers now spread across numerous financial regulatory agencies.