Elizabeth Warren is one of my heroes. Barack Obama appointed her to be Chair of the Congressional Oversight Panel created, which was established to oversee the banking bailouts. For many years, Warren has fought tough battles on behalf of consumers.  [See the related posts to this post; and here’s a video of Warren being interviewed by Jon Stewart that will give you an idea of what she is about (and especially consider Part II)].

Warren is now facing an incredibly tough uphill battle. Her main weapon is common sense. She wants to regulate banks and non-bank lenders, to stop them from defrauding consumers with their fine print, their outlandish fees and their arithmetical hocus-pocus. In a fair fight, her position should easily win the day. But it’s not a fair fight, because the financial services industry owns much of Congress. Therefore, Warren has spent much time advocating for the need for a strong Consumer Financial Protection Agency (CFPA). Here’s what Warren has to say about the need to regulate non-bank lenders:

There is more that we can do to deal with non-bank lenders, but only if Congress creates a strong CFPA. If we stick with the status quo — which treats loans differently depending on who issues them and places consumer protection in agencies that consider it an afterthought – we know what will happen because we have seen it happen before. Lenders will continue their tricks and traps business model, the mega-banks will exploit regulatory loopholes, and the non-banks will continue to sell deceptive products. In that world, small banks will need to choose between lowering standards or losing market share, and they will still get too much attention from regulators while the non-banks and big banks get too little. Dangerous loans will destabilize both families and the economy, and we’ll all remain at risk for the next trillion-dollar bailout.

Regulating the non-banks hasn’t been tried in any serious way. The CFPA offers a real chance to level the playing field, to add balance to the system, and to change the consumer lending landscape forever.