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Professor Warren Speaks to Consumers Union


This afternoon, Professor Warren spoke at an event celebrating the 75th anniversary of Consumers Union. During her speech, she spoke about the CFPB’s emphasis on clear prices and risks, which will help consumers make the choices that are best for themselves and their families. She also announced a conference one week from today on the first anniversary of the date that most provisions of the Credit CARD Act took effect.

Below is an excerpt from her remarks:

The fine print and the ability to change products and prices in subtle and not-so-subtle ways creates layers of complexity that stand in the way of direct, apples-to-apples comparisons among credit products. The kind of comparisons that drive competition around lower prices and better features for cameras and toasters is too often missing for credit cards and checking accounts. How does a consumer compare two credit products based on an advertisement when the true cost won’t be clear until months later? And how does a consumer draw comparisons when there are so many different components of cost in each product? How does a consumer keep track of the continual evolution of the products being offered across the entire market by different providers? And, finally, how does a consumer draw comparisons among products without knowing the nature or likelihood of changes that are likely to occur after the deal is struck?

That’s where the new consumer bureau comes in.

We believe in comparison shopping. We want the price and the risks to be clearer, so that consumers can see what is being offered and decide the products that are best for them. We want to see innovations, lots of innovations. But innovations need to be around real product differences that consumers can see and understand – not around misleading advertising and new tricks buried in the fine print. Our goal is simple: We want the credit market to work better for consumers, for responsible providers, and for the whole economy.

Congress has already begun to change credit markets. The new CARD Act changed certain elements of credit card pricing, and the mortgage reform provisions of Dodd-Frank will alter some of the ways mortgages are sold. It is too soon to tell how much these new rules will push the markets in the right direction, but the consumer bureau is already beginning the work of trying to assess how the market has reacted to changes in the credit card landscape and to watch out for consumers.

One week from today, the consumer bureau will host a conference on the Credit CARD Act at the Treasury building in Washington. Congress indentified a number of unfair practices in the credit card industry and outlawed them in the CARD Act, and it will be the one-year anniversary of the implementation of most of the provisions that law. Our plan is to find out how much has changed in that year. To do that, we are going to take a hard look at the data – interest rates, re-pricing and the like. We will bring together academics, industry leaders, consumer advocates, and voices from within government to look at the data from multiple directions, and to analyze how the industry has reacted and how consumers are responding. The idea is to establish a fact base upon which the CFPB can improve our understanding of the impact of the CARD Act and to help us understand how we can make credit markets work better.

Read the full text of her remarks.

  • Stanturner

    Hi Professor Warren,

    First, thank you for taking on this challenge.

    As a 40 year veteran in the financial services industry, I would like to share a couple of thoughts. In a recent L.A. Times article, you were quoted as saying: “I don’t think there’s a question about what caused this crisis,” Warren said. “It started with one lousy mortgage at a time, household by household. This started with people marketing lousy mortgages to Americans.”

    While this is certainly valid, I would like to take you back about 30 years or so. When I was a young mortgage lender, we used to pride ourselves in making good loans that were appropriate for the borrower. If we made a bad loan, we had to collect it, and it looked bad on our record. So I made very few, if any, bad loans.

    Then the accountability went away because of the secondary market. I was no longer responsible for any mistakes in judgment I may have made. While that made my job much less stressful, it also allowed for many more bad loans made to the wrong consumers on the wrong terms,often for the wrong reasons. Please bring “accountability” back into the equation.

  • Get A Job

    I believe we are going much too far in this quest of Ms. Warren.

    We have literally thousands of different financial institutions in this nation. If I find that one of them has a better offer, I am free to switch. If I find a current provider has provided me with poor service or a charge I disagree with, I am free to move my business to another provider, many of which are more than happy to receive my business.

    I really don’t want a new agency adding to my taxation. I really do not want an agency telling me how to shop for financial services.

    Were there a few bad actors in the financial services arena? Yes. But instead of spending tens of millions on creating a new agency and taking choices away from me, why not just go after the bad actors?

    This agency is leading us down a very slippery slope. Its very creation assumes that Americans are too dumb and too stupid to make good choices for themselves. It assumes that government is needed to help them make these choices. I, for one, strongly disagree.

    If we allow government to intervene in these transactions, what will be next? Will we create a government agency, or worse yet, allow this agency to impact other areas of our financial lives. Will we have an agency that will ensure that we understand all of the potential maintenance costs of an automobile that we purchase over its useful life? Will we have an agency that requires clothing manufacturers to show how many washings an item can sustain during its useful life?

    This is beginning to border on the ridiculous. I do not, repeat – do not, need to be protected from myself. Please stop interfering in my financial affairs. Your actions will reduce my choices – not improve them. I am for choices – not more governmental interference.

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