—JAMES SUROWIECKI, The New Yorker’s Financial Page columnist [via The New Yorker]
Elizabeth Warren, who was appointed as the head of the newly created Consumer Financial Protection Bureau by President Obama, just may be “the most hated person in Washington,” according to The New Yorker’s Financial Page columnist James Surowiecki. She’s hated in particular by conservatives and banking interests, and why? They say Warren is out to regulate their industries to death.
And what has Warren done, exactly? She’s dared to push for the elimination of fine print and legalese, so that consumers actually understand financial products. The bureau created a prototype for a simple mortgage form with all essential info on a mere two pages, so that a would-be homeowner can see in a glance what the terms are, and compare them with other lenders. She’s also stated broad goals for financial products such as these:
Let’s measure our success with simple questions — Can customers understand a product? Do they know the risks? Can they easily figure out what it really costs?
Is any of this too much to ask for?
Surowiecki suggests that the banks and other businesses lined up in opposition to Warren don’t realize that it’s in their long-term interest to have customers who actually understand the products, know the risks, and can easily figure out the costs. Smart regulation improves the consumer-business relationship and the industry as a whole, and Surowiecki cites a few historical examples to prove it:
Meatpackers hated the Meat Inspection Act of 1906, but it rescued the industry from the aftereffects of the publication of “The Jungle.” Wall Street said that the creation of the S.E.C. would demolish stock trading, but the commission helped make the U.S. the world’s most liquid and trusted stock market.
A little regulation and transparency just might be the banking industry’s salvation.