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There’s a new sheriff in town to watch out for consumers

The newly created Consumer Financial Protection Bureau doesn’t officially open for business until July 21. But the agency is already making its presence felt.

The bureau has just debuted a new website, ConsumerFinance.gov, that features a getting-to-know-you video narrated by Ron Howard. Consumers are invited to post their concerns and offer suggestions for the bureau’s priorities.

And this week the agency sent a letter to leading bank executives urging them to provide more financial safeguards for military personnel and their families. The letter warned banks not to violate laws protecting active-duty service members from home foreclosures and high interest rates.

Elizabeth Warren, who is overseeing establishment of the Consumer Financial Protection Bureau, says these are just the first of many steps the agency will take to let people know there’s a new sheriff in town.

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“Once this agency is up and running, there will be a level playing field,” she told me from her Washington office during a wide-ranging interview this week. “The first job of this agency is to be a cop on the beat, to make sure the rules get enforced.”

I asked her opinion of the recent report from the Financial Crisis Inquiry Commission laying blame for the mortgage meltdown on everyone from overzealous home buyers to underachieving government officials.

“I don’t think there’s a question about what caused this crisis,” Warren said. “It started with one lousy mortgage at a time, household by household. This started with people marketing lousy mortgages to Americans.”

It’s a testament to the agency’s potential clout that the financial-services industry and U.S. Chamber of Commerce fought its creation every step of the way. They argued that a tougher regulatory environment would cause credit to shrink, especially for small businesses.

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David Hirschmann, head of the chamber’s Center for Capital Markets Competitiveness, said business leaders are trying to be more supportive now that the bureau is a done deal. But he said his organization will be watching closely to make sure the agency’s rules are consistent with other regulators.

“Businesses want to know the speed limit when they drive out of the garage,” Hirschmann said. “They don’t want each cop deciding their own speed limit.”

Warren, 61, has been striving to play nice with the industries the bureau will oversee. She’s invited representatives of various companies to meet with her staff to express their views — just as she’s invited consumer advocates to get their points across as well.

The bureau has a full plate. When fully operational, it could have as many as 1,000 staffers and will oversee most aspects of consumer lending, from credit cards to mortgages.

“I feel a little like Bob the Builder,” Warren said. “I spend my day hammering things together.”

It’s an open question whether she’ll end up running the agency. When her name first surfaced as a potential director, the word from Capitol Hill was that Warren couldn’t win enough votes in the Senate for confirmation.

Democrats say her pro-consumer stance is just what’s needed to keep lenders on the up and up. But Republicans view Warren as anti-business and overambitious in her regulatory zeal.

To keep things moving, President Obama tapped her as an assistant charged with getting everything in place — essentially a director without portfolio. It’s possible Warren could still be named director in a recess appointment. It’s just as possible she’ll step aside for someone else to take the job.

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So far, Warren has proved to be adept at navigating Washington’s eel-infested waters. Take, for example, her hiring of Holly Petraeus, wife of the top American general in Afghanistan, to head the bureau’s Office of Servicemember Affairs.

Any Republicans want to challenge that?

It’s about time we had a serious consumer advocate empowered to stand up to lenders. A lot of the trouble that resulted from the mortgage mess could have been avoided if there’d been a regulator assertive enough to have sounded a warning before things plummeted out of control.

Is Warren that person? Yes, but she may now be too divisive a figure to get the political backing her agency needs. There have been reports that several state attorneys general may be in the running for the director’s job. That might be the way to go.

In any case, Warren is already aware that fresh blood is needed in the regulatory arena. She said she wants to avoid hiring nothing but older, seen-it-all-before bureaucrats who may be set in their ways.

“We’re going to hire new, young staff and train them to follow the law,” Warren said.

Hey, wait a minute. Isn’t that the script for “The Untouchables”?

“That’s what I’ll be renting this weekend,” she said, laughing.

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One last thing

My column Tuesday on Capital One dredging up decade-old debt omitted an important point: If you pay even a single penny under such circumstances, it starts the statute-of-limitations clock all over again.

Under California law, a lender can’t sue to recover credit card debt for which no payment has been made for at least four years. More than a few readers speculated that by sending out payment-due notices for long-ago debt, Cap One may be trying to trick people into restarting the statute of limitations so the company can be more aggressive in its collection efforts.

It’s as good a theory as any. And one more thing to watch for.

David Lazarus’ column runs Tuesdays and Fridays. He also can be seen daily on KTLA-TV Channel 5. Send your tips or feedback to david.lazarus@latimes.com


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