WASHINGTON (CN) – President Obama on Friday named Harvard law professor Elizabeth Warren consumer czar, tasking her with setting up a new consumer protection agency as part of financial regulatory reform.
Warren will oversee the creation of the Consumer Financial Protection Bureau, the new consumer watchdog that was included in the Wall Street reform bill signed into law in July.
“The Consumer Financial Protection Bureau will empower all Americans with the clear and concise information they need to make the best choices — the best financial decisions — for them and their families,” Obama said in the Rose Garden Friday, flanked by Warren and Treasury Secretary Timothy Geithner.
Obama introduced Warren as “a janitor’s daughter who has become one of the country’s fiercest advocates for the middle class.” Obama says he has known Warren, an Oklahoma native, since law school and took an interest in her work while he was a senator.
Warren will serve as assistant to President Obama and as special adviser to Geithner. As special adviser, Warren will help recruit staff and set policy initiatives for the new agency.
The agency’s main purpose is to oversee the consumer credit market, ensuring that the terms of financial transactions, such as mortgage and credit card contracts, are crystal clear to consumers.
The bureau will also crack down on predatory mortgage practices, ensure that students who take out student loans receive clear information on their loan agreements, and ban unfair credit card rate hikes, Obama said.
Also, under new regulations enforced by the agency, consumers who are denied a loan will immediately receive a free credit score.
Obama said the bureau would be a “watchdog for the American consumer” to counter efforts of financial industry lobbyists to look out for the interests of big banks.
Obama inserted an element of the personal in his remarks, saying he and Michelle “often found ourselves confused” by their finances when they were starting a family, buying a first home, paying off college loans, and putting debt on credit cards.
“Never again will folks be confused or misled by barely understandable fine print,” Obama said.
Warren is credited with coming up with the idea for a consumer protection agency in 2007, having advocated for stronger consumer protections before the 2008 economic crisis hit. After the financial collapse, Warren was appointed chair of the congressional oversight panel that investigated the federal bailout of Wall Street firms.
By naming Warren as an adviser rather than the agency head, Obama bypassed a possibly challenging congressional confirmation process in a tense election season.
Warren announced that she “enthusiastically agreed” to fill the position in a blog post published on WhiteHouse.gov early Friday. In the post, she said Americans “shouldn’t learn about an unfair rule or practice only when it bites them.”
“The time for hiding tricks and traps in the fine print is over,” she wrote. “If the [bureau] can succeed at leveling the playing field, we can go a long way toward repairing a gaping hole in the budgets of millions of families.”
At the end of the press conference, Obama gave Warren a side kiss on the cheek and the two returned, along with Geithner, to the West Wing.