Elizabeth Warren the head of the new Federal Consumer Protection Agency sat down with Michelle Singletary the Washington Post to explain the first goal of the new agency. Warren told Singletary the the Ageny’s first initiative would be to ensure that banks and finance companies compete on an even playing field on the interest rates and other terms they offer consumers rather than hiding those terms in a thicket of legalese. If pricing for financial products is clearly disclosed then more consumers will know what they are purchasing and will not get caught unawares by a teaser loan rate that suddently spikes making it impossible for them to pay their mortage or credit card bills. This will also encourage that banks and finance companies begin to compete more on pricing.
The article states:
But right now, Warren says her focus is on helping consumers understand how much they are paying for debt on everything from credit cards to mortgages. At a recent conference held by the Consumer Federation of America, Warren said the bureau’s initial goal isn’t to impose a series of “thou-shalt-not rules.” Instead, she said that first on the agenda is providing consumers with better and shorter credit disclosures. Although this goal may sound so simple, it has the potential to greatly reduce the financial burden for people, because they don’t fully comprehend how much their debt is really going to cost them. “There are a lot of financial institutions that make their money by keeping products confusing so the price isn’t clear until it’s way too late,” Warren told me. “They make money by concealing risk, which means that people can’t compare the products head to head.”
You can read the full Washington Post article by clicking here.
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