Banking execs await first major speech from Elizabeth Warren, Obama consumer finance czar

Obama consumer finance czar to address bankers

WASHINGTON — In her first major speech since being tapped to set up a new consumer finance agency, Elizabeth Warren is expected to tell bankers how she thinks credit cards and mortgages can be made safer and more fair for consumers.

Warren will speak Wednesday night in Washington before about 400 executives of the nation’s largest financial companies. She is the keynote speaker at an annual dinner hosted by the Financial Services Roundtable, a trade group that spent the past year lobbying against the agency’s creation — and against Warren.

The consumer agency is a cornerstone of the sweeping financial overhaul signed into law this summer. Warren was seen as a top candidate to be named its first director. Instead, President Barack Obama created a special role for her: advising the White House and Treasury as the agency is being set up.

The agency, which Warren first proposed in a 2007 article, aims to protect consumers from tricky or deceptive loans and other financial products. Its early efforts will involve making mortgage and credit card disclosures easier to understand, Warren has said.

The agency was a major sticking point for lawmakers debating the financial law. The law was a response to the credit crisis in 2008 that nearly toppled the global financial system. It aims to make future crises less likely and easier for the government to address without risking trillions of taxpayer dollars.

Banks said the agency was unnecessary bureaucracy and would create confusion without helping consumers. Democrats said it would address a root cause of the crisis: bad loans to consumers who couldn’t pay them back. As those loans were resold through the financial system, investors and companies were left with huge mortgage investments that they could not resell. No one knew what the investments were worth.

After the law passed, Warren’s appointment became a favorite cause of left-wing critics of the Obama administration. They said the White House has been soft on banks that took big bailouts but didn’t lend to help the economy recovery. Liberals hoped Warren’s views would balance those of Treasury Secretary Timothy Geithner, whom they perceive as pro-industry.

Republicans said Warren, a Harvard Law School professor, lacked the experience to manage a big bureaucracy. They said she is too hostile to industry to work well with them.

Wednesday’s speech will test those claims. Liberals will be watching for any signs that she has softened her stance now that she is part of the administration. They worry she will lose sight of her early goal: ending lending practices that hurt consumers.

Republicans and bankers want to know she is prepared to consider their concerns when making key decisions about how the agency will use its vast powers.