WASHINGTON (Reuters) - President Barack Obama’s new chief consumer financial protection adviser warned banks on Tuesday the days of tricking customers to fatten their profits were over.
Elizabeth Warren said she did not believe lenders were entitled to a “level of revenue set at a time that it was a kind of ‘anything-goes’ world,” and firms that failed to adapt to the new era of financial transparency would perish.
“The room for anybody in the financial services industry to make their money by squeezing you here and squeezing you there, tricks and traps, that is going to go away,” she told an online White House forum to which the public submitted questions.
Obama appointed Warren last month to stand up a new consumer protection bureau to ensure fair play in lending, in order to prevent a repeat of the abuses that led to a subprime mortgage crisis and a severe U.S. recession.
The bureau was created by Obama’s radical shake-up of Wall Street regulation despite entrenched opposition from the financial services industry and many Republican lawmakers, who say it will hurt U.S. businesses and jobs.
The financial services industry had been particularly hostile to Warren’s involvement in setting up the new agency, accusing her of an anti Wall Street bias, evident over her many years as a staunch advocate for consumer rights.
Republicans and conservative allies have deployed this anti business argument against Obama’s Democrats ahead of the November 2 midterm congressional elections, where the Republican Party is expected to make significant gains.
Warren made plain that the new bureau was designed to put lenders who relied on trickery out of business for good.
“I think there are some banks who will be glad to see that day come,” Warren said, referring to the new bureau’s objective to make financial products more transparent.
“I think the banks that don’t like it, that customers like you are going to make the difference about whether they survive,” she told one questioner.
Wall Street practices are back in the news three weeks from the November 2 poll amid concern that banks are evicting homeowners who get behind in their mortgages by rushing through foreclosures based on faulty paperwork.
Warren, asked about the foreclosure issue, acknowledged it was a serious problem and said the federal government was working with the industry to get a grip on the problem.
“I think right now the role is to do what we can -- and I don’t just mean we the agency, we’re in our infancy -- but the federal government in general, different agencies, to gather information and try to get ahead of what’s going on,” she said.
Additional reporting by Rachel Younglai; Editing by Anthony Boadle