TARP chief: Consumer protection must be in Wall Street reform

Elizabeth Warren, chairwoman of the Troubled Asset Relief Program oversight board, told CNN on Saturday that without a centralized consumer protection agency, customers will be unable to defend themselves against abusive bank practices if history is any guide.

She illustrated her point by saying that bank regulator The Office of the Comptroller of the Currency has never sided with customers in recent lawsuits involving banks.

{mosads}“They have never entered in the last few years on the side of the consumer,” she said. “[The OCC] is here to protect those banks from these big, tough, ornery consumers who want to do things like have contracts they can read or not be tricked into ending up with 48 percent interest [on loans].”

Warren claims the current system where consumer protections are dispersed among all the agencies makes it too easy for special interest groups to intervene and keep oversight to a bare minimum.

Under the Wall Street reform bill authored by Senate Banking Chairman Chris Dodd (D-Conn.), the agency would be housed at the Federal Reserve, which would enforce consumer protections for financial institutions and certain non-banks. To some extent, smaller, local banks would also fall under the Fed’s rule.

Republicans such as Sen. Kit Bond (Mo.) have argued against centralizing the protection agency because non-financial companies, such as dentists or plumbers who offer credit to customers, would likely fall under its authority.