WASHINGTON White House consumer adviser Elizabeth Warren said the government should not force a single business model on lenders, addressing concerns that the new consumer agency she is charged with creating will be heavy-handed in mandating financial products.
Warren, known for rankling Wall Street, said new consumer rules should promote a variety of options for consumers that could be offered by large and small institutions.
"The goal of regulations should not be to drive to a single model where there is one kind of lender that should be advantaged over everybody else," she told the National Association of Federal Credit Unions on Wednesday.
She said the forthcoming regulations should root out bad players among lenders and increase competition among the good ones.
On September 17 Warren was named as a special adviser to President Obama whose job would be creation of the Consumer Financial Protection Bureau. She will also report to Treasury Secretary Timothy Geithner.
Her appointment as a special adviser occurred after it became clear she would face a brutal Senate confirmation process if nominated as director of the agency.
Republicans and Wall Street have heavily criticized Warren, a Harvard law professor and watchdog for the government's $700 billion bailout of the financial system, for what they see as a bias against the financial industry.
The new Consumer Financial Protection Bureau, created under the Dodd-Frank Act signed in law in July, has broad authority over consumer lending practices, including mortgages and credit cards.
Its creation was a top priority for consumer groups and Democrats, but Republicans and business leaders sharply criticized it as a vehicle for choking off profits through onerous regulations and new limits on what type of products can be offered.
They also have feared that the agency would mandate a whole menu of simple, or "plain vanilla," loans and other credit products.
Warren said the industry has gotten "out of whack" in recent years with consumers not understanding the products they are purchasing, something she said she aims to change.
"We're about to enter a new day on the front of how we think about financial products," Warren said.
(Reporting by Dave Clarke; Editing Steve Orlofsky)