Elizabeth Warren

Article excerpt

Byline: Robert J. Samuelson and Jeffrey Bartholet

Obama tapped her to set up the new Consumer Financial Protection Bureau. Can she create a more honest market?

When do you aim to open the new agency?

The official transfer date is July 21, 2011. That's when we pick up responsibility for the 18 federal consumer-financial-protection laws that are now enforced by seven different regulatory agencies. All of that comes to us.

Speak to the average consumer out there. What do you expect will be different a year, two years from now? Take mortgages. When you get a mortgage or refinance your home, you are presented with a large stack of papers that someone hands you and --

-- and says, "Sign here, sign here, sign here," and strongly urges you not to read them.

The law requires the agency to come out with a model mortgage document within a year.

My ambition is to create a one-page mortgage-shopping document that [would come] early in the process and have all the key terms the consumer needs to shop for a mortgage: the monthly payment, cash at closing, how long it will take to pay off the loan. That's what produces real value for the consumer, and that's what creates a more competitive mortgage market. Compliance also becomes much easier for lenders, and this is particularly important for community banks. Complex regulations are killing community banks. They can't afford an army of lawyers to work through the regulatory thicket.

Would this require new legislation?

We may reach a point where we have to go to Congress and ask them to amend pieces of the 18 regulatory laws that are out there, to permit us to lighten the regulatory burden. Let's pick one concrete example. There's something called a TILA form [from the 1968 Truth in Lending Act], and there's also a RESPA form [from the 1974 Real Estate Settlement Procedures Act]. Both are required by law as part of the mortgage documentation. They come shortly before closing--long after the consumer has shopped for the mortgage and decided to buy the home. …