Obama Eliminates Warren as Consumer Protection Agency Head
President Barack Obama has chosen a candidate other than Elizabeth Warren as director of the new Consumer Financial Protection Bureau, according to a person briefed on the matterFriday nite surprise?
When it opens its doors next week, the federal government's new agency to protect consumers from financial fraud won't be quite the aggressive watchdog promised a year ago.
Because of political squabbling, the Consumer Financial Protection Bureau formally will launch without an appointed director. And the lack of leadership has real consequences.
The agency won't have power, for instance, to crack down on mortgage brokers, some of which helped lead the nation into the housing debacle four years ago.It also won't have authority over other largely unregulated sectors of the financial services industry, such as payday lenders and remittance companies such as Western Union, that it was created to police.
Watching the New Consumer Watchdog
The agency will pull together rule-writing, enforcement and supervisory responsibilities now handled by seven different agencies, giving consumers a single place to go for financial matters for the first time. It also will take on new duties, including the potential supervision of big private student lenders, mortgage servicers and credit bureaus.
The agency, however, can't regulate nonbank firms until it has a permanent director. For now, Elizabeth Warren, who fought for the agency's creation, will preside over it as an assistant to President Barack Obama.
Though the CFPB is structured to be independent of congressional budget actions, some Republicans have called for cuts to its funding and changes in its leadership structure, complaining that the agency has too much unchecked power.