By Elizabeth Warren
This morning I’m traveling to Columbus, Ohio, to continue the work I began on day one: listening to the stories of American families, consumer advocates, and leaders in the industry who can see firsthand the consumer credit market is broken. There’s a broad consensus that we need to cut back on the fine print in consumer credit agreements that prevent families from being able to make apples-to-apples comparisons among products. President Obama asked me to get to work right away standing up the new Consumer Financial Protection Bureau to level the playing field for American families. Before I left for the next stop on my listening tour, I wanted to update you on how we’re going to get the consumer credit market working for everyone—families, the industry and the entire economy.
In these critical early weeks and months of building the CFPB, I’m focused on three priorities: reforming the reams of paperwork involved in signing a home mortgage, moving to a short, easy-to-understand credit card agreements, and building a 21st century agency that works on behalf of American families every day.
A mortgage is the biggest financial commitment most Americans will make in a lifetime. But, getting stuck with the wrong mortgage can cost a family tens of thousands of dollars over the life of the loan. The CFPB will make it easier for families to see the costs and risks upfront and give them the tools to make the choices that are right for them. We have already recently improved mortgage disclosure statements, and that will help families, but we need to go further: shorter, clearer disclosures, all-in pricing, and a longer time period when estimates are binding so that families can shop around.
Almost four out of every five families now have a credit card, and almost half of all families carry a balance. The CFPB will make costs and the risks of credit agreements clear for families. If the costs are clear, some people will dial back the risks, decide to purchase less, or decide to use cash or a debit card. A level playing field for consumer credit where families can compare products will allow competition to flourish, but in ways that customers can see—better customer service, lower prices or even features such as cool new iPhone apps.
When the terms of the deal are clear, most families will make good decisions about which consumer credit products work best for them. Personal responsibility is absolutely critical: the CFPB will empower American families with better tools to make better choices. The consumer agency will be a central clearinghouse to gather information about what’s going on in the consumer credit markets to make sure the agency is focused on what’s really happening. And for the first time ever, there will be a cop on the beat to keep an eye on consumer financial products. For too long, American families who have worked hard, played by the rules, and lived up to their financial obligations have struggled in a financial system that was not designed to give them a voice. Consumers have been outgunned by hordes of lawyers that create incomprehensible fine print and hordes of lobbyists that fight against basic, commonsense rules. The CFPB will advocate a level playing field and a market that works for everyone.
President Obama was clear when he asked me to take on this job standing up the consumer agency: We need to get to work right away to level the playing field for American families. I’m already hard at work creating a 21st century agency that will be a voice for consumers in Washington. My trip to Columbus today is another opportunity to reach out and talk about making the consumer credit market work for borrowers, lenders, and ultimately, the entire economy.