Warren to Seek Simplified Mortgages
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- Peter King | December 17, 2010
Mortgages and credit cards will be the primary initial focus of the new Consumer Financial Protection Agency because of the major roles they play in people’s lives, the person charged with setting up the new bureau has said.
Mortgages are a top priority because “they are the single most important financial decision that most families will make,” said Elizabeth Warren, who has been tasked with setting up the new agency. Credit cards will be the other major priority, she said, because they are the most widely used financial product in the country.
Warren, a professor of law at Harvard University who has served on a number of high-ranking economic panels, is overseeing the creation of the new bureau in her role as Special Assistant to the President and Special Advisor to the Secretary of the Treasury. She recently discussed her goals for the agency in a profile on the web site of the Department of the Treasury, where the new bureau will be established.
An outspoken consumer advocate who pressed hard for the agency’s creation, she has repeatedly called for simplifying consumer financial agreements, saying the dense and impenetrable disclosure forms that accompany mortgages, credit cards and other financial products prevent credit markets from operating as they should.
“When a family cannot tell the cost in full of a credit card, when it is not possible to determine the risks of a mortgage in advance, and when people can’t directly compare three or four products– apples to apples – to tell which costs the most and which bears the most risk, then the market is broken,” she said.
“This agency will drive toward making the costs clear, making the risks clear, and making it easy for consumers to compare one product with another,” she continued. “When they can do that, credit markets will work for families.”
She said that current financial disclosure forms provide very little benefit to consumers and actually increase costs for lenders. Making disclosure clearer and more useable to consumers, she said, will actually reduce costs to lenders while providing greater value to borrowers.
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