September 23, 2010 / 11:07 AM / 9 years ago

Consumer czar Warren: banks receptive to change

WASHINGTON (Reuters) - Elizabeth Warren, the Obama administration’s new consumer financial protection czar, said on Thursday that banks are showing early receptiveness to her plans for simplifying their disclosures to consumers.

U.S. President Barack Obama announces consumer advocate Elizabeth Warren (R) as special adviser leading the creation of the Consumer Financial Protection Bureau in the Rose Garden of the White House in Washington September 17, 2010. REUTERS/Kevin Lamarque

Warren, who was last week appointed to a special advisory role to set up the new Consumer Financial Protection Bureau, told CNN that she believes financial services firms want to do a better job for customers on products like mortgage and credit card agreements.

“I have to say, meetings with folks from the industry have been really good. I think the reason for that is that more of them say this is that this has unsustainable, this isn’t going to work over time,” Warren said.

She said surveys have shown banks that customers are dissatisfied with convoluted agreements that disguise the true price of credit cards and mortgages.

“I think there are more lenders now that are going to get on the side of their customers. If you get some, then the point of regulation is to make sure you drag the reluctant ones along,” she said.

Warren, who serves as a special adviser to President Barack Obama and Treasury Secretary Timothy Geithner, reiterated her goal to shrink credit card agreements to a standard two pages.

She says many cards lure customers with a low nominal interest rate, but in the fine print there are provisions that allow them to raise rates and charge hidden fees.

“If we can get these products simpler so that the price is clear up front, then the prices are actually having to compete head to head, and the card issuers that are charging the most are going to find themselves with fewer customers. That’s how markets work,” Warren said.

She added that it was an easy choice to not seek the full directorship of the agency, which was created this summer under landmark financial reform legislation.

She said full U.S. Senate confirmation as head of the CFPB could have taken up to a year, during which she would not be able to do her job or talk publicly about the changes she wanted to make.

Previously, Warren, a Harvard Law School professor and consumer advocate, had chaired the Congressional Oversight Panel, which helped police the Treasury’s $700 billion bailout program.

Reporting by David Lawder; Editing by W Simon

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