Al Lewis: Watchdog for Middle Class is 'Controversial'

Certain members of Congress keep trying to kill the Consumer Financial Protection Agency before it is born, but so far they're losing to a former Sunday school teacher.

"I am not going down on this agency without a fight," Elizabeth Warren said earlier this month at a Society of American Business Writers and Editors meeting in Dallas. "It is a fight worth having."

Warren, who draws inspiration from Methodist Church co-founder John Wesley, has been preparing the way for the new agency to open July 21. From the beginning, she's fended off calls that she go away and battled legislation designed to kill, defund or otherwise neuter her baby.

Reminds me of when our fearless leaders gutted the Securities and Exchange Commission and so many other regulatory agencies and then asked why there were so many Ponzi schemes.

"The plan is stick with our failed financial system," Warren said of her congressional opponents and the banking industry that backs them.

Warren won't accept that plan. She wants banks to be held accountable and consumers to receive honest and clear disclosures about mortgages, auto loans, credit cards and payment systems.

The financial collapse of 2008, she said, was fueled with misleading paperwork. For this, she's been branded "controversial." Oh, and then there were those other "controversial" statements she made when she sat on a panel that oversaw the bank bailouts known as TARP.

"We need two central changes," she declared in December 2009. "Fix broken consumer-credit markets and end guarantees for the big players that threaten our entire economic system .. If we don't get those two right, I think the game is over."

Whoa! End too-big-to-fail before it kills us? Heresy!

Treasury Secretary Timothy Geithner has reportedly wanted to chop Warren off at the knees for her zealous oversight of his bank-bailout efforts. Yet earlier this week, he acknowledged that Warren remains in the running to head the Consumer Financial Protection Agency, after all.

"Oh, absolutely," he said during a TV interview. "She is doing an excellent job of bringing clear disclosure to Americans so they can make a better choice about how to borrow to finance a home or how to make sure they can responsibly borrow on a credit card."

Anybody who says Warren is "controversial" has got to be a lending industry huckster or a member of Congress in their back pocket. Who else opposes forthright disclosures to borrowers? Who else avoids questions like "What is the price?" "Can a borrower afford it?" or "Can a borrower get a better deal somewhere else?'"

"This is like the most basic stuff," Warren said. "You can tell what a box of cereal costs. You can tell what a jacket costs. You can even tell, kind of, what a plumber costs. But you can't tell what some of the most powerful financial decisions in your life actually cost."

The new agency, formed as part of the Dodd-Frank financial-overhaul law, aims to end an era of lending charlatanism that led to the bust.

"We're trying to make the price clear, the risk clear, and make it easy to compare products," Warren said. "If banks can't build a business model without fooling people about the price, or hiding the risks, or obfuscating the products so nobody can make any direct comparisons, they've got a problem."

I first interviewed Warren in February 2005 when she was a mere Harvard professor trying to protect the middle class with her books and research. Back in the mortgage-fueled boom, many believed their home value would double again, even as others were filing bankruptcy en masse.

Warren had co-authored a study that showed medical bills contributed to about half of all personal bankruptcies.

"I wish I could say that this was a story of people who went to the mall and bought too many Game Boys," she told me at the time. "A broken health-care system is bankrupting middle-class America--and neither the insurance companies, nor the credit industry, nor Congress wants to admit that."

Warren got pushback then. And she is getting pushback now.

"How much of that pushback is about money? And how much of the pushback is about politics? I don't think we'll ever sort it out. Because I think those two have found each other and multiplied their forces."

She endures in her stand against the hollowing out of the middle class at a time when few others dare to acknowledge the cause.

"If anybody thinks what we're talking about is controversial, then that just tells you how far we've come over the last 15 years or so."

(Al's Emporium, written by Dow Jones Newswires columnist Al Lewis, offers commentary and analysis on a wide range of business subjects through an unconventional perspective. The column is published each Tuesday and Thursday at 9 a.m. ET. Contact Al at or