Consumer czar: Financial industry still aims to block

By Reuters
Posted Oct. 29, 2010 at 6:28 a.m.

The financial industry continues trying to thwart the Obama administration’s effort to set up an effective consumer protection agency, though one is needed now more than ever, new consumer czar Elizabeth Warren charged on Thursday.

“We fought hard to get here, and those who tried to block the agency’s creation have already said that they will be back,” Warren said in remarks prepared for delivery at the University of California in Berkeley,

“Every day, they spend money to find a way to cut back the agency’s power — even before its work has begun,” she added. A text of her remarks was issued in advance in Washington.

Warren was named a special adviser by President Barack Obama and asked by Treasury Secretary Timothy Geithner to “stand up” a new watchdog agency to help simplify credit contract language and give consumers more protections.

The agency was authorized under terms of the Dodd-Frank financial regulatory overhaul bill, which Congress approved to try to lessen risks of future financial crises like the one that wracked the country from 2007-2009.

Warren said the U.S. middle class has seen a steady deterioration in its economic security for more than a decade. She noted that economic disparities had sharply widened during the most recent boom, which terminated in the housing crash that was widely blamed on reckless bank lending.

Warren also noted that while median family incomes rose 37 percent during the 1960s, a period of prosperity, they had grown just 1.9 percent in the 2000s because the wealth had flowed so disproportionately to the already-rich.

She suggested that a lack of protections in the law for consumers would have saved many from taking out ill-advised loans and that better data collection on financial-sector activities would make it easier to spot budding trouble spots.

“Anyone who wants to understand why America’s middle class is not bouncing back from the 2008 crash should remember that, unlike in early boom-and-bust cycles, middle class families had no parachutes when they were pushed off a cliff in the Great recession of 2008,” Warren said.

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