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"America is its middle class."
"America is its middle class." / H. Darr Beiser for USA WEEKEND
Mortgages are on Warren's agenda. / Kutay Tanir, Getty Images

On her agenda

What can you expect the Consumer Financial Protection Bureau to do when it opens its doors July 21? Granted, interim chief Elizabeth Warren doesn't have the power to make rules, but she is leading the charge, and these items are at the top of her list:

  • Mortgages. Bring clarity on the costs and risks of taking out a mortgage, and bring it early in the home-buying process. The Good Faith Estimate form that lenders now issue, at three pages long, is an improvement because it's standard. But it is not good enough for Warren, who wants to see the nitty-gritty details on a single page.
  • Credit cards. Give consumers the ability to easily compare three to four offers. Think about how easy car shopping online has become. You can go down your wish list and see: Car A has a third seat, side air bags and gets 25 mpg. Car B has no third seat or side air bags, but it gets 35 mpg. It makes it easier to choose.
  • Money transfers. Make clear, in advance, the cost of sending money through electronic transfers. This is now a problem when sending money via wire transfer to foreign countries. Fees may be made clear upfront, but the cost of converting dollars to foreign currency may not — and it can be very costly.
  • One-stop complaining. Give consumers one place to call when they feel they have been cheated by a credit product. Seven federal agencies are responsible for the 18 consumer financial protection laws. Consolidation under the new bureau should streamline the process.

  • Being able to compare credit card offers is important for Warren. / Whisson/Jordan/Getty Images
    Warren will give customers a place to turn when they feel they've been cheated. / C Squared Studios, Getty Images
    First, make it clear what is being sold. Then, the best products will prosper, Warren believes. / Joshua Roberts, Bloomberg, via Getty Images


    Elizabeth Warren wants to make it clear: "Shopping for a mortgage should be as straightforward as buying breakfast cereal."

    Warren, the Harvard law professor tapped by President Obama to launch the Consumer Financial Protection Bureau, says that just as you can compare cereals on nutrients and price, you should be able to see that one mortgage, with lower fees and cheaper interest rate, is the better deal. And you should be able to do it, she says, on a "single sheet of paper."

    Warren, 61, who also is a best-selling author and one of the country's leading experts on bankruptcy, first pitched the concept of the agency three years ago. Then, in speeches and on talk shows such as Morning Joe and Charlie Rose, she talked up the idea of an independent agency that would protect consumers from financial risks. No doubt it helped that she was speaking from her perch as chairman of the Congressional Oversight Panel, which supervised the distribution of $700 billion in federal stimulus money.

    The consumer protection bureau, an independent agency housed inside the Federal Reserve, launches July 21. And while there is no official to-do list, eliminating confusion not just in mortgages but also in credit cards and other financial products is a priority (see box).

    Once consumers can compare on an apples-to-apples basis, Warren believes, they'll gravitate to better products, and the companies that don't provide them will get left behind.

    "America is its middle class," Warren says. "The resiliency and optimism of the middle class defines our country. It makes us different from the rest of the world.

    "Most middle-class families are hardworking. They play by the rules. They're the people who pick up litter and mow their lawns and attend PTA meetings and make things work without public recognition. And middle-class families are fighting for their lives."

    One of four kids, Betsy (as her family called her) Herring was raised in Oklahoma City by a father who worked as a janitor and a mother who took Sears catalog orders. The family had so little that Warren, the state champion on an otherwise all-male high school debating team, didn't tell her folks she was applying to college until she earned a scholarship. "We were broke a lot of the time, but my father tended the gardens at my school and my mother always led a Bluebird troop." The lesson she took to heart: "Being middle class is not a state of money, it's a state of mind."

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    By 1979, she was a young mother a few years out of law school when she noticed that more middle-class families were filing for bankruptcy. Warren dug in, sure she'd find overspending deadbeats trying to game the system. But she found hardworking families who had lost jobs, become seriously ill, filed for divorce. "The last place they ever expected to be was bankruptcy court."

    Warren's family had experienced many of the same ups and downs, including the loss of a family business and foreclosure. But times were different then, and they were able to recover. The income of middle-class families stagnated during the '80s and '90s, and prices on everything from housing to medical care to education continued to rise. To top it off, Warren explains, this happened at the same time the credit industry learned it could make "astonishing amounts of money by concealing the risks people were taking by borrowing." That realization keeps her going. "I wake up every day and work as hard as I can because time is running out for middle-class families."

    Warren had many advocates pushing for her to lead the bureau. Rep. Barney Frank, D-Mass., whose bill brought the agency to life, told MSNBC she was "absolutely essential." Rolling Stone's Matt Taibbi blogged "Elizabeth Warren For President 2012." But the banking industry has yet to come around. It fears the agency will add another layer of regulation that will increase costs, stifle innovation and curtail choices for consumers.

    "We agree completely on disclosure and transparency," says Scott Talbott, chief lobbyist for the Financial Services Roundtable. "The challenge on fees is that a bank, like every other business, has to cover its operating cost. If fees are restricted too much, we're worried you could harm the availability of products in general."

    There was concern about whether she would survive the Senate approval process if she were nominated as permanent director of the bureau, so Obama named her interim head instead. Now, in addition to figuring out how to structure the bureau, she will be involved in choosing a permanent leader. Those same champions hope it will be her. At the same time, her detractors are trying to figure out how they can limit the power of the CFPB.

    But Warren points to the Food and Drug Administration, Federal Aviation Administration and Consumer Product Safety Commission as examples of other independent agencies that protect consumers.

    "Thanks to federal agencies, no one competes in the pharmaceutical industry by substituting cheaper baking soda for aspirin," she says. "When was the last time you heard a friend or colleague complain that the FAA should do less to prevent plane crashes?"

    She also believes that the changes she'll bring to financial products will make life better not just for consumers but eventually for banks. Once it becomes clear what is being sold, Warren believes, the best products, and their makers, will prosper.

    "I didn't come to Washington to be popular, I came to do a job. It makes me feel deeply responsible. I know a lot of people are counting on me."

    Contributing editor Jean Chatzky is the financial editor for NBC's Today.

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    Jean Chatzky, award-winning journalist and best-selling author, is the financial editor for NBC’s Today, a contributing editor for More Magazine, and a columnist for The New York Daily News. She blogs daily at