Warren extends olive branch to bankers
U.S. Treasury Secretary Timothy Geithner listens to Elizabeth Warren, assistant to President Barack Obama and special adviser to Geithner on consumer protection issues, speak at a conference on mortgage disclosure last week.
(Photo Credit: Jay Mallin/Bloomberg)
By Brady Dennis
Elizabeth Warren has wielded a rhetorical sledgehammer against the nation's biggest banks in the past, chastising them for using "tricks and traps" to reap massive profits by deceiving their own customers.
But Wednesday evening, in her first speech as an Obama administration official and the de facto leader of the new Bureau of Consumer Financial Protection, she extended an olive branch to the 400 bankers gathered at the swanky Mandarin Oriental Hotel.
"Some of you may have noticed that I have not kept my opinions to myself about where I think the financial industry has gone wrong. And I notice that some of you have not kept your opinions to yourself about me," the 61-year-old Harvard Law professor said according to prepared remarks for the annual meeting of the Financial Services Roundtable, which represents the nation's largest financial firms.
"But there is something you may want to know: I come to Washington as a genuine believer in markets and a genuine believer that the purpose of regulating the consumer credit market is to make that market work for buyers and sellers alike."
She quoted from a speech that businessman Joseph P. Kennedy gave after he was appointed as the inaugural director of the Securities and Exchange Commission in the 1930s: "We are not working on the theory that all the men and all the women connected with finance, either as workers or investors, are to be regarded as guilty of some undefined crime. On the contrary, we hold that business based on good will should be encouraged."
The not-so-subtle message: Behave, play nice, and we'll get along just fine.
In her speech and in an interview earlier in the day, Warren said she hopes to take a more "principles-based approach" to regulation, rather than simply saddling companies with more of what she calls "thou shalt not" rules -- which make for burdensome, costly compliance and which banks often start trying to skirt as soon as they are written.
"Regulators can make more pronouncements from on high, identifying suspicious practices in the various markets and banning them. Or regulators can layer on more disclosure requirements," Warren said in her remarks. "But neither restores customer trust."
Rather, she said, "Let's measure our success with simple questions" -- Can customers understand a product? Do they know the risks? Can they easily figure out what it really costs?
The speech contained an understated but unmistakable challenge to those in the room to change their ways. Glimpses of the feisty Warren remained, such as when she noted that "too many Americans see dealing with banks like handling snakes - do it long enough and you'll get bit."
But mostly, this was a kinder, gentler approach. The group's president, Steve Bartlett, had invited Warren to speak at the meeting before President Obama named her to the lead role in shaping the new consumer agency, before she had an official title, before her words had to be vetted by the powers-that-be in the administration.
"She's on point for an issue we care about -- protecting consumers," the group's chief lobbyist, Scott Talbott, said in explaining the reason for asking her to be the keynote speaker.
Since taking the job earlier this month, Warren has reached out to chief executives, trade associations, members of Congress and consumer groups. She seemed Wednesday to be aiming for harmony among the warring factions, at least for now.
"It is now, right here at the beginning, that we have a remarkable chance to put aside misconceptions and preconceptions -- whether they are yours or mine. We have a chance to build something better," she said. "I'm here tonight to ask if we can work together."
Hours earlier, in her spartan office on the second floor of the Treasury building, Warren seemed hopeful but uncertain about how what kind of reception she might receive from the sea of bankers.
"This is the invitation to another approach, and we'll see what they say," Warren said, adding jokingly that, "I am going into a room where there are forks and knives on the table."
| September 29, 2010; 9:01 PM ET
Categories: *Economic agenda, Consumer Financial Protection Bureau, Financial regulation
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